Kentucky unemployment benefits cut in half starting in January, other changes

LOUISVILLE, Ky. (WDRB) -- An overhaul of Kentucky's unemployment system goes into effect next month, with benefits being cut nearly in half.

But opinion is divided on whether the result will be positive.

Since its creation in 1938, Kentucky unemployment insurance was available for up to 26 weeks -- or half a year.

"This is a system that's kind of been the way it is for decades now," said Charles Aull, executive director for the Kentucky Chamber of Commerce's Center for Policy and Research. "Things have to change."

Beginning Jan. 1, the amount of time available will vary using a new formula created by lawmakers this spring. It is based on the state's unemployment rate from months prior. A lower unemployment rate will result in a shorter time unemployment benefits are available. The new range will be a maximum between 12 and 24 weeks.

This January, up to 12 weeks will be available. That's less than half of what it was before.

"We can speed that process up a little bit," Aull said. "That's a great thing for those workers. It's a great thing for Kentucky's economy."

The Kentucky Chamber of Commerce's official position is that the change will be beneficial and get workers back in the workforce faster, but Dustin Pugel with Kentucky's Center for Economic Policy says the opposite.

"I actually think that pursuing cuts to unemployment benefits is sort of shooting yourself in the foot," Pugel said.

Along with the new formula are additional work search requirements, which include a minimum of submitting three job applications a week.

"The intent of all of that is not to create a whole bunch of red tape. It's not to create a burden on that individual," Aull said. "It's to raise those expectations and provide a roadmap for how they can make that transition from unemployment to reemployment."

But Pugel says it is adding more barriers and says the long lines for unemployment help seen during the pandemic should have been a lesson.

"Instead of adhering to those lessons, they've added more complexity to a system that was already overburdened," he said.

In this analysis, Pugel says there's changes to what Kentucky's UI system deems "suitable" for accepting a new job.

But both Aull and Pugel support the concept of work share, a form of unemployment insurance that gives employers the option of reducing employees’ hours instead of cutting their workforce during a business slowdown. Now, Kentucky's unemployment insurance system would offer supplemental benefits if an employee's hours are cut.

The state is also offering a new re-training and education option to its unemployment benefits. Aull said if someone seeks those out they could get up to an additional five more weeks.

"That could present a really great opportunity to take advantage of programs like Kentucky's Work Ready scholarship, college access program, look at short term credentialing. It's so that while you're unemployed, use that time to put yourself in a better position than you were before and you can go find that next job," Aull said.

An easily comprehensive guide from the state on the changes is not readily available at this time. The bill text is available online here.

The state's unemployment insurance portal can be accessed here.