Should Seasonal Employees Be Eligible for Unemployment Benefits?

by Ryan Guina

I read a thought provoking article in CNN Money this morning about how some states are limiting the unemployment benefits they pay to seasonal workers. Federal law already prohibits professional athletes from collecting unemployment benefits between seasons, and teachers from collecting unemployment benefits during the summer. After that, the federal law leaves most eligibility rules up to the states.

Should seasonal workers receive unemployment benefits?

Should seasonal workers be in this line?

Until recently most states allowed seasonal employees to collect unemployment benefits during the months when they were unemployed. For example, school bus drivers, cafeteria workers, janitors, and many other school employees know they will be unemployed during the summer months. This extends into the arts as well; many actors, stagehands, musicians, and similar entertainment professions are routinely out of work between seasons. Other examples of seasonal workers include construction, hospitality and toursits industries, etc.

Now some states are citing insolvent unemployment insurance funds as a reason for cutting eligibility for these benefits. Unemployment rates ahve simply been too high for too long, and many states have run out of money to pay out on unemployment insurance.

There are currently 15 states that limit unemployment benefits to seasonal workers, and several more states have legislation in work to limit benefits, or have commissioned studies to determine the impact this would have.

Is it Fair to Cut Unemployment for Seasonal Workers?

Before we answer this question, it will be helpful to take a look at what unemployment insurance is, what it is designed to do, and who pays for it. Then we can better answer the question. Let’s start at the source:

Contrary to popular belief, individuals don’t pay unemployment insurance taxes. Employers and the federal government pay into the unemployment system, and the states handle the distributions (which is why they often have a little more say on who is eligible).

Unemployment benefits are more or less a safety net – they exist to help people through tough times when they lose their job. Workers are usually eligible to receive unemployment benefits when they lose their job through no fault of their own (there are some rules regarding eligibility, such as those listed for teachers, professional athletes, and some other cases).

These benefits aren’t designed to replace full-time income (most benefits are capped at a few hundred dollars per week, depending on your income going into unemployment). Instead, they are designed to help people get by until they can find another source of income. There is also a time limit – usually 26 weeks, depending on the state (some states have extensions depending on how high their unemployment rate is).

To continue receiving unemployment insurance benefits, recipients must be able to prove they are actively seeking employment. This is usually done by sending in a list of jobs  they have applied to, or places where they have submitted their resume.

So now to answer the question – is cutting benefits to seasonal employees fair?

I understand both sides of the fence on this debate. I received unemployment benefits when I left the military. It wasn’t fun, and I didn’t like the idea that I needed it. But in the end, I realized that is what it was for, and it was helpful as it took me six months to land a job. But I also see where states are coming from. Unemployment benefits are a finite resource, and with a sputtering economy, states need to decide how best to use their limited funds. In this case, I can see why they would choose to prohibit seasonal workers from receiving benefits.

The other factor at play is that many of these workers aren’t unemployed in the traditional sense – they are simply on hiatus. Many of these workers have jobs they will be coming back to; they simply aren’t working at the time. Many of them don’t have any incentive to find work while they are receiving unemployment benefits because they know they will collect it for a few months, then they will go back to their previous job. That doesn’t fit within either the spirit of the law, or the law itself, as people who are receiving unemployment benefits must actively seek employment.

This makes it easy for many people to use unemployment insurance benefits as an income supplement subsidized by taxpayers. And I don’t agre with that.

But I don’t think workers who truly need help should be shut off completely. For example, states such as Massachusetts, Colorado and Pennsylvania don’t allow seasonal workers to collect unemployment benefits unless they are laid off during their normal working season – for example, a school bus driver laid off during the school year, or a white water raft guide laid of during the summer rafting season. There are other benefits out there, such as food stamps, welfare, WIC, etc.

In the end, I see both sides of the argument, but no clear cut or easy solutions.

What are your thoughts on giving unemployment benefits to seasonal workers?

Photo credit: canonsnapper

Published or updated May 31, 2012.
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{ 2 comments… read them below or add one }

1 Samuel A Mathews

Hello Ryan Guina my name is Samuel Mathews… I’m a composer out of Seattle Washington. I was reading your article about weather the states should allow seasonal workers to recieve unemployment benefits? Well I think they should. Remember Boeing? In the mid 80s to the 90s Boeing would consistently layoff there workers according to the needs of the company. People in Seasonal work positions are more at risk than someone who is not. Most Seasonal workers are not provided the protection that an full time worker would have. Also the myth that workers don’t pay into unemployment insurance… is a lye! If you work for a bus company part-time you pay unemployment under the labor and industry guide lines… most musicians if they are full time musicians half to also pay into unemployment benefits as well. They also pay BNO taxes to the State. Don’t negate that musicians are considered to be self employed… they pay a lot more tax than the average “Jo” … something to consider…


2 Ryan Guina

Hi Samuel, Unemployment benefits are paid by employers, so if you are self-employed and pay yourself a salary, you pay unemployment taxes (I am self-employed and pay unemployment taxes for myself, along with a host of other taxes, so I’m familiar with paying a lot of taxes). When I was an employee for a large corporation, they paid unemployment taxes on my behalf.

The Federal Unemployment Tax Act (FUTA), with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a Federal and a state unemployment tax. A list of state unemployment tax agencies, including addresses and phone numbers, is available in Publication 926, Household Employer’s Tax Guide. Only the employer pays FUTA tax; it is not deducted from the employee’s wages. For more information, refer to the Instructions for Form 940 (PDF). (source: IRS)

The above quote is from the IRS, and represents federal taxes. I’m not sure what the requirements are for each state, so I can’t speak specificaly about Washington, or any other state.

The situation about Boeing is not what I am referring to when I talk about seasonal employment – they were being laid off at the behest of the company, it wasn’t a set schedule the employees could plan around each year. The issue many states are taking up is seasonal employees who use unemployment benefits as part of their regular income each year, even when they know they will have a period of unemployment at the same time each year. The example of people who work for school districts, the tourism industry, ot other forms of employment which have defined “seasons” is what they are trying to cut out.

Is it fair that someone can work 9 months out of the year, then have the state support them the other 3 months of the year, and do this year in and year out? At that point, it becomes part of their income plan and they have no incentive to look for another source of income because they know they will be back to work in a few months. That is the issue states are taking up with these changes.

I’m not trying to be argumentative; I see both sides to this. It’s a complicated topic, and one with no easy answers. On the one hand you don’t want people to suffer when they need assistance, but on the other hand, you don’t want to have a built in benefits system that allows people to work 9 months every year, then take 3 months off, and repeat the process for decades.


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