AUGUSTA, Maine — To combat continued high unemployment rates, Congress took an unprecedented step earlier this year, authorizing a pilot program allowing use of unemployment benefits to subsidize the creation of full-time jobs. However, it’s unlikely Maine employers will be able to participate in the program because the state doesn’t have the money to fund the it.
“No doubt it might very well put people back to work,” said Maine Labor Commissioner Robert Winglass. “It’s a question of affordability on the one hand because there is no federal money that comes with the program.”
He said the state has no funds to use to administer a pilot program and he said it would be expensive to provide the monitoring required under the federal measure. Up to 10 states can be approved to participate in a pilot project that would allow funds normally restricted to paying benefits to subsidize employer-provided training or pay employers that hire those on unemployment.
“Would we like to do something with this? Of course,” Winglass said. “But we do not have any resources and we are not the only state that is not applying because of the lack of funds to administer a pilot.”
David Clough, state director of the national Federation of Independent Businesses, said he has no doubt such a program would draw support of employers and those looking for work.
“Certain businesses would be very interested in the program,” he said. Clough said if the pilot was focused to help provide on-the-job training it would draw support from employers hard pressed to pay for training workers even though they would like to hire additional workers.
“We’ve got 50,000 people out of work in Maine and we should look at anything that might help get them back to work,” Clough said.
Peter Gore, vice president of the Maine Chamber of Commerce, said there would be employers that would take advantage of the program. He said there are jobs in the state going unfilled in some sectors such as manufacturing, where training is crucial, and a pilot program could convince employers to hire more workers.
“I think there would be interest, but there would also be questions,” he said.
Gore said employers would worry about using a pilot that would end when the need would not. He said that would raise the issue about the ongoing cost to the unemployment trust fund and whether using the pilot could affect employer tax rates in the future.
“I can’t honestly say how much interest there would be, but I think there are employers, particularly in the manufacturing sector, that would seriously look at it,” he said.
Gore said he does understand the concerns of the Labor Department about the costs to administer the program. He hopes Congress would provide at least some administrative funds to allow states like Maine to apply for a pilot project.
“I thought that there would be grants available to help administer these programs,” said Sen. Olympia Snowe, who supported the measure in February. “This is a common sense and practical approach to helping the unemployed and employers at the same time.”
The Republican senator said Congress should act to make sure federal Labor Department officials make grants available to the states that want a pilot program. She said it is a “win-win” for both workers and employers and the best pilot projects should be used as a model for a program available in all states.
But U.S. Representative Mike Michaud, a Democrat, said the pilot proposal is a bad idea that he opposed and is concerned it will undermine the unemployment system.
“Unemployment benefits should only be used to help the unemployed,” he said. “There are other job training programs out there that can be used without using the unemployment trust fund.”
Michaud said ensuring the fiscal stability of the trust fund is a high priority for him and that the pilot programs could end up undermining the fund over the long haul.
Winglass said if Congress does act to provide some administrative funds for the pilot programs, his agency would closely look to see if they could propose a pilot program that the state could afford.