Change is coming to Iowa’s unemployment benefits. Gov. Kim Reynolds signed a bill Thursday reducing the length of benefits and tightening regulations on them.
“The bill that I sign today caps unemployment benefits at four months down from over six months, and ensures that those collecting benefits can’t turn down suitable jobs,” Reynolds said in a keynote address at an Iowa Association of Business and Industry conference in Dubuque, which culminated in the signing of the bill into law.
The bill cuts the maximum number of weeks Iowans are eligible for unemployment benefits from 26 to 16. It further cuts the maximum duration of unemployment benefits for Iowans laid off because their employer went out of business, from 39 to 26 weeks. And for those still receiving benefits after 18 weeks, it requires them to accept offers at with significantly lower wages or risk losing benefits completely.
“We are working with them (the unemployed) but it is definitely something that will move us in the right direction,” she said.
Coming out of the pandemic, Reynolds argued that the safety net was leading Iowans to not take jobs, worsening the workforce shortage. She said the bill modernizes Iowa’s unemployment system, attracting new employees to Iowa’s workforce.
After the eighteenth week of benefits, a worker was already required to take a job or lose benefits, if the wage is at least 65 percent of their previous wage. Under the new law, that wage drops to 60 percent.
Peter Orazem, an economist at Iowa State University, said workers may not be willing to accept a job offer because some unemployment benefits remain, but said workers surveyed on a week-to-week basis while receiving unemployment benefits responded that the wage expectations never reached anywhere near 60 percent their previous wage.
“It’s just not going to happen. The younger people – who are most likely to be unemployed — their labor participation has increased since the pandemic. It’s older workers who have dropped out and they’re not coming back,” Orazem said.
Between 2019 and 2021, more than 7 percent of Iowans ages 45 and up hadn’t returned to the workforce. For women ages 55 to 64, 9 percent hadn’t returned.
Iowa unemployment insurance claims peaked in April 2020 with over 64,000 initial claims. But as of January, claims had returned to pre-COVID levels.
This story was updated on June 23 at 1:55 p.m. to clarify that the new law does not include a one week waiting period before a person can receive unemployment benefits.
