South By North Strategies, Ltd.

Off the Charts explains why increased “flexibility” in state unemployment insurance systems isn’t so good.

Letting states divert UI funds for other purposes would start the UI system down a slippery slope, even if those other purposes might benefit some unemployed workers, such as providing additional job training.  Among other things, states could replace state or local funds now used for job training or other such purposes with diverted UI funds and then shift the withdrawn funds to other uses, including tax cuts.  The net result could be a reduction in unemployment benefits with little or no offsetting increase in employment services.
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Similarly, waiving the prohibition against excessively burdensome administrative obstacles would enable states to reduce UI benefit costs and tax rates by making it harder for eligible people to participate in the program — a less overt way to cut costs than shrinking benefit levels or the number of weeks of benefits.
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Finally, the House provision could also allow states to impose new eligibility requirements not directly based on workers’ employment history, such as requiring UI recipients to have a high school diploma or GED.