Rules are leaving many ineligible for jobless benefits

Joann Stigen gave notice to her employer after accepting a new customer-service job, and then took one week off before starting the new job.

In the middle of that week, her new employer called with apologies about an immediate job freeze, and rescinded the offer.

Because Stigen had voluntarily quit one job and technically never started the other, the 51-year-old Blaine resident was ineligible to collect an unemployment check.

That was more than a year ago, and with the national unemployment rate now at 6.7 percent, the number of people falling through the cracks of a system intended to see working Americans through jobless spells has only increased.

Some of those ineligible for the compensation, like Stigen, have unusual circumstances. Some of them disqualified themselves, by working off the books or getting themselves fired. But many others are blocked by system rules, including contract workers -- a fast-growing part of the workforce whose non-employee status has often cost them health insurance and now costs them unemployment insurance -- the self-employed and new college graduates, labor advocates said.

The most recent figures show that 35 percent of the 10 million jobless Americans were collecting the government-granted benefit. In Minnesota, it's 39 percent of the state's 175,000 jobless, according to state officials.

"Income support for a pretty substantial portion of the population just doesn't exist," said Paul Harrington, an economist at the Center for Labor Market Studies at Northeastern University in Boston.

Those high numbers are the main reason Congress enacted two recent, temporary extensions of unemployment benefits this year. The federal government estimates that as a result, 52 percent of jobless Americans will be able to collect benefits.

Unemployment compensation is available nationwide, but states administer the program and have some discretion in setting its terms. The money comes from payroll taxes paid by employers. Generally, assistance is available to those who lose their jobs through no fault of their own -- most commonly because a business slowdown leads to layoffs.

Workers who lose their jobs can collect benefits for up to 26 weeks. The federal-paid extensions have added another 20 weeks to the programs in most states. In high-unemployment states such as Minnesota, the extensions added 33 weeks of payments. The weekly amount received depends on a worker's earnings and length of employment; Minnesota's maximum is $566.

The impact of unemployment benefits reaches beyond those collecting them, Harrington said. The program was created to be an "automatic stabilizer" of the economy, he said. Without the benefit, the families of half of unemployed Americans would fall into poverty within four months, according to the Congressional Budget Office. That means they couldn't shop for holiday gifts or even pay their mortgages or gas bills, he said.

But at Minnesota Workforce Centers around the Twin Cities, part of a statewide network of services for the unemployed, it's not difficult to find people who don't qualify for the payments.

Larry Adams of Blaine was a contract worker who produced a newsletter for a tribe of Native Americans in California. Adams, 48, said he was laid off about a year ago and still is looking for work. "I always understood I wouldn't qualify for the benefits, but the problem is, if something happens, you don't have health insurance or unemployment."

Thomas Harms of Mora said the trucking company where he worked earlier this year didn't pay his payroll taxes, as required.

"The state said it had no record that I worked there," said Harms, 35. Trucking company officials declined to comment.

Gloria Johnson of Bloomington believes her application was unfairly denied. Johnson, 52, did quit her job at a nursing home -- but because she felt she was being mistreated she had no choice, so it wasn't really voluntary, she said. It's an allegation her former employer denied.

Minneapolis attorney Marshall Tanick, who has represented both companies and workers in employment disputes, faults Minnesota's system for relying mostly on the word of employers about benefit eligibility.

"I've seen only one case in the past year where the state got back to the employee, asking if they wanted to refute the employer's contention, and that used to happen a lot," he said.

But Ingrid Culp, an attorney at Fredrikson & Byron in Minneapolis, said the system is plenty demanding of employers. Employers need to contest claims they believe are unfair, as a deterrent to more unfair claims, Culp said. But that costs them time and money, through potentially three rounds of appeals, she said.

Tanick is also no fan of the state's high-tech system, where people can apply for benefits only by phone or online, and hearings are conducted by phone.

Lee Nelson, chief attorney to the Minnesota Department of Employment and Economic Development, said the new technology makes the system more efficient and accurate.

Nelson, in turn, believes to the statistic used for the percentage of unemployed Americans being paid a benefit is unfair. He said it includes people who had never worked before or hadn't worked for at least a year -- so-called "entrants" and re-entrants" -- so he doesn't see how they can consider themselves "unemployed." It also means no employer has been paying a tax that would finance their benefit..

But the National Employment Law Project, in New York, believes the statistic appropriately reflects the current toll of joblessness on Americans.

"This is the rate of people who are unemployed, who are looking for work and trying to get by," said Andrew Stettner, deputy director.

The project is among advocates for a federal Unemployment Insurance Modernization Act. The act, which has passed the House, would finance rule changes by states to expand coverage among low-wage and other workers.

It's unclear whether the act would help Linda Zinter of Bloomington, who lost jobs in downsizings at two insurance companies over the past two years. The second job lasted only about four months. A complicated formula disqualified her for the federal benefits extension -- she fell $2,000 short of the $14,000 minimum for 12 months.

"I can't believe I was too poor to get help," she said. "I lost a job through no fault of my own, and I fell through the safety net because I made too little."

H.J. Cummins • 612-673-4671