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Governor’s Address: Businesses beware: higher unemployment taxes are on the horizon

In this tight labor market, we must use every tool at our disposal to encourage laid-off workers to search for work and to take the jobs they are offered.

Unemployment is insurance, not an entitlement. It is a safety net – not a means of subsidizing one employer’s payroll on the backs of all other employers. Yet, the Legislature doesn’t understand the basic principles of the unemployment system.

They voted for a bill that attempts to turn this insurance program into an entitlement: LD 700, “An Act to Give Flexibility to Employees and Employers for Temporary Layoffs.” This new law grants a six-week waiver from the work search, provided an employer gives a recall date.

It effectively takes these workers out of the labor market while they collect benefits, despite our acute workforce shortage.

I vetoed this bill with good reason, but the Legislature overrode it. The goal of unemployment insurance isn’t just to provide temporary wages. It keeps workers connected to the labor market so they are more easily and quickly re-employed.

The work-search requirement is critical to that goal, and it is a discretionary tool to manage an employer’s workforce during fluctuations in unemployment cycles. LD 700 eliminates that discretion. Folks, that is just plain old bad business.

Those who look for work and take temporary jobs while collecting unemployment are better off financially, and they provide tremendous help to our employers who are trying to find workers in this era of record-low unemployment.

Waiving the work-search requirement is equivalent to a free pass, and it does nothing to further these positive outcomes. Without the requirement to search for work, many – if not most – seasonally laid-off workers will not bother to look for work. Some will decide not to work at temporary jobs.

Know this. Employers who have the highest use of unemployment in their slow season are already socializing their costs across the system. This law does nothing to change that process; in fact, it incentivizes it.

Now, hundreds of able-bodied Mainers will temporarily disappear from the labor market – some will probably take subsidized vacations to Florida using benefits other employers have paid. These workers will have zero responsibility for the benefits they are drawing from the unemployment system. This is unacceptable.

I believe we will all begin feeling the effects of this ill-informed bill as oil dealers struggle even more to find drivers to deliver your fuel this winter. The Legislature’s misguided notion is that this bill helps laid-off workers. But that, ladies and gentlemen, is a sham. When laid-off employees look for work, they are exposed to new opportunities that will benefit their career and their family’s finances.

And when businesses have to compete to retain and attract those workers, wages rise. Maine businesses deserve the opportunity to compete for these workers, especially when their unemployment is being subsidized by your taxes.

LD 700 is an assault on the basic principles of unemployment. Coupled with record low unemployment and Maine’s rapidly rising minimum wage, it will be a recipe for disaster for Maine businesses.

Thank you.

Paul LePage


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