As the recession of 2008-2009 showed, it is critical for state Unemployment Insurance (UI) Agencies to be able to anticipatechanges in political, economic, and social drivers and their impact on workload and service delivery. That recession saw UI and reemployment systems taxed beyond their limits while their supporting trust funds and grants were depleted. Many of those trust funds are only now returning to sustainable levels, while at the same time UI Agencies administrative grants are decreasing, tracking with the unemployment rate. This decrease in funding and the correlated staffing challenges puts UI Agencies into a position where any sharp increase in unemployment could rapidly land them back where they were in 2008: struggling to meet demand while their trust fund balances head south. The hardening of the UI supporting technical infrastructure, fueled by ARRA funding, has met with very limited success and has left state UI systems vulnerable to the same capacity demands that strained them during the recession.
In addition to the economic factors that may impact state agency operations, the new presidential administration is promoting changes to funding along with new initiatives that will have an inevitable influence on the operation and execution of state workforce agency programming. Job training, especially in anticipation of over one trillion dollars in announced US physical infrastructure spending, may be a state priority even with the proposed reduction in federal training dollars. New trade regulations will undoubtedly have an influence on labor engagement. The new administration has expressed support for paid maternal leave. The implementation of such a plan would be dependent on state systems’ ability to support the associated case management and may also be contingent on increased integrity measures. The prioritization around identifying misclassified workers that we’ve seen in recent years may diminish. Finally, there is already a strong indication that the H-1B program may be substantially restricted, as new enforcement guidance has already been released. The H-1B changes may have a significant impact on states that rely on foreign labor to support their IT operations and systems.
This white paper is intended to draw together information and analysis regarding the potential impacts the current presidential administration is likely to have on state workforce and unemployment insurance operations. Manifestly, the current executive is intentionally shifting away from the budgetary, policy, and regulatory standards followed by recent presidential administrations. Although the character and magnitude of this shift are still in flux, it is not too soon to begin to plan and adapt state operations to adjust for the coming changes.
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