Here’s how to get people back to work, off unemployment faster

IT IS PROBABLY too early for Gov. Maura Healey to be thinking about her legacy, but we have a suggestion for how she could make her mark on Massachusetts. The governor could employ a new approach to make the state’s workforce training system more accessible, more utilized, and better able to re-employ people quickly.

Not only would this resonate with employers and employees alike, but it would also replenish the talent pipeline and improve the state’s economic outlook. Healey can do this by better integrating workforce training and unemployment insurance benefits.

The governor’s initial workforce-related actions are quite promising. They include:

• Introduction of the $20 million MassReconnect scholarship program, which would provide free associate degrees and certificates for those age 25 and older.
• Expansion of Early College and Innovation Pathways by adding $14.4 million over FY23 funding for a total spend of $46.9 million.
• Increased funding for the registered apprenticeship programs by $5 million in FY 2024 while expanding the apprenticeship tax credit.
• Continuation of the workforce skills cabinet that brings together several secretariats with business representatives for a more coordinated approach to workforce development programs.
• Creation of the MassTalent website, integrating workforce training and other resources for the life sciences, healthcare, advanced manufacturing, and clean energy sectors in its first phase.

Despite all these efforts, there is more work to be done to improve our workforce development and the Commonwealth’s economy.

Our idea involves more formalized integration of the state’s unemployment insurance system with state-funded workforce training programs. We suggest the Department of Unemployment Assistance (DUA) and MassHire become more proactive in making connections between the unemployed and companies that are hiring.

Nearly 88,000 Massachusetts residents filed for unemployment benefits in March. A smaller subset of them qualify for unemployment insurance benefits and a smaller number still are required to enroll in the Reemployment Services and Eligibility Assessment, or RESEA, program. Imagine if the unemployed were automatically enrolled in training programs or directly connected with employers looking to fill jobs?

As members of the 2021-22 Special Commission on the Unemployment Insurance Trust Fund, we witnessed firsthand the unwillingness of legislators and labor representatives to make changes to the UI benefit structure, which was $2 billion in the red. If lawmakers were not willing to consider changes to the UI system then, they certainly won’t pass legislation now.

Our proposal requires no legislative changes to the benefit structure or duration. Instead, it reduces the time that a person is unemployed by facilitating their job searches and providing them with the skills they need to more quickly become reemployed. And, it has the added benefits of helping employers fill vacant positions — one of the biggest workforce challenges facing businesses today — and helping the unemployed find gainful employment.

The proposed fix

Under the current RESEA system, those receiving unemployment benefits who have been permanently separated from their employer are required to connect to MassHire centers and register with the JobQuest program. While these are important steps, we think more can and should be done to proactively match those on unemployment with available jobs given the Commonwealth’s labor shortages and changing demographics.

Under a new, more coordinated program, people who qualify for UI benefits would not only automatically be referred to one of the state’s 25 MassHire Career Centers, they would automatically be enrolled in an appropriate training program if necessary and/or directly connected to hiring employers by a MassHire representative. Employers would be incented to more closely partner with MassHire Centers to develop a robust database of job openings.

The benefits of a more integrated approach are numerous and necessary. The formalized program would:

• Ensure that UI beneficiaries who are required to seek employment are actually doing so, and in a meaningful way.
• Better align training programs with current employer needs by providing real-time information about job openings, currently available workers, and any mismatches between the two. This information, in turn, would help the workforce training programs to adapt more quickly and better fulfill their mission.
• Reduce unemployment benefit payouts, improve the solvency of the UI trust fund, and ultimately lead to lower UI premiums for Massachusetts employers.

The result would be a more robust talent pool from which employers could draw and improved career opportunities for job seekers.

We appreciate that accomplishing this may require some investments in technology but believe that available ARPA funds could cover these costs.

High cost of doing business in Massachusetts

Massachusetts employers face the highest unemployment insurance premiums in the nation, costing more than double the national average. This is a result of Massachusetts’ generous benefits of up to $1,015 per week (the highest in the nation), 30 weeks duration (also highest in the nation), and lax eligibility requirements.

Not only do Massachusetts’ unemployment benefits contribute to the high cost of doing business in the state, the current UI program provides disincentives for those collecting benefits to return to work at a time when job openings outnumber job seekers by a ratio of 2:1.

As a recent McKinsey report entitled The Future of Work makes clear, the importance of our workforce development cannot be overstated. According to the report, by 2031, between 300,000 and 400,000 Massachusetts workers will be displaced and need to transition to different occupational categories or occupations. Furthermore, the burdens of displacement will be disproportionately borne by lower-income earners.

Better integrating the unemployment and workforce training systems would advance the Healey/Driscoll administration’s goals of affordability, competitiveness, and equity, all while improving outcomes for beneficiaries and taxpayers. Healey has indicated she is open to new ideas, invited more collaboration with stakeholders, and encouraged more public-private partnerships.

The governor acknowledged that “COVID has taught us new ways of doing things.” We think further integration of the UI and workforce training systems provide a great opportunity to do just that and stand ready to help in this transformation.

Karen Andreas is president and CEO of the North Shore Chamber of Commerce. Eileen McAnneny is a senior fellow for economic opportunity at the Pioneer Institute.