Victory, Finally, for Unemployed Seniors in Illinois

Illinois is the last state to repeal jobless aid reductions for workers receiving Social Security retirement benefits.

In a world where progress often seems rare if not impossible, a little-noticed story from Illinois last week shows that progress does happen. In this case, it’s a result of persistence by many individuals and groups over a 12-year, multi-state campaign.

On December 4^th, Illinois repealed an obscure but unfair provision in its unemployment insurance law. As a result, Illinois will soon stop reducing unemployment insurance benefits when a claimant is also receiving Social Security retirement benefits. This reduction of unemployment benefits was known as the “Social Security offset.” With this step, Illinois becomes the 21^st and final state to repeal offsets since 2003.

The receipt of both UI and Social Security benefits at the same time is consistent with the programs’ complementary purposes. Social Security retirement benefits are based upon a lifetime of work, and the lion’s share of these benefits are paid after retirement age without any conditions on employment status or earnings. Unemployment insurance benefits partially replace lost wages of involuntarily jobless individuals who remain attached to the labor market and have earned monetary eligibility based upon recent employment.

These two benefits are not duplicate payments. Older workers who must work or choose to work should not have their unemployment benefits cut or eliminated simply because they have reached the age to qualify for Social Security.

There was never a valid policy justification for the Social Security offset. Indeed, offsets were purely a result of a crabbed interpretation of federal law by the U.S. Department of Labor and state inertia keeping them on the statute books. Here’s the back story.

In 1980, the U.S. Department of Labor told states that an amendment to federal law requiring a reduction in state UI benefits when claimants receive pensions from former employers meant they must treat Social Security retirement like a pension. States were then compelled to include Social Security benefits when applying pension offsets in all state UI laws.

Lawsuits challenging this restrictive Labor Department interpretation were unsuccessful, including one I filed while a lawyer at the Legal Aid Society in Louisville on behalf of William Bowman. In the face of these suits and Congressional criticism of their restrictive interpretation, the Labor Department retreated somewhat, saying that states were permitted under federal law to have the Social Security offset but no longer required to do so. Given this flexibility, over the next few years, a majority of states abandoned the offset. Twenty-one states (including the District of Columbia), however, did nothing and kept offsets in place.

Years passed. The Social Security offset issue dropped off the political radar screen until an article about unemployment insurance appeared in the AAPR Bulletin in the summer of 2002. Enough affected members called in to the AARP switchboard to put the issue back on the group’s legislative agenda. Starting in Wyoming and Kansas in 2003, with the encouragement of state AARP affiliates, states gradually repealed Social Security offsets. By the start of 2008, only Colorado, Illinois, Louisiana, South Dakota, and Utah retained offsets. Gradually, these remaining states passed repeals, eventually leaving only Illinois with an offset.

Congratulations are deserved for the many who contributed to this effort. During recent years, Nancy Solomon, whose unemployment benefits had been denied under the Illinois offset provision when she was laid off, started what seemed a quixotic individual campaign. She made sure public officials and others knew that Illinois was now a laggard on this issue. In the final effort, the Illinois AFL-CIO and AARP ensured that the issue was included in the 2015 Illinois UI bill approved last week.

These sorts of victories are often characterized as small. Einstein is quoted as saying “there is no difference between large and small problems, for issues concerning the treatment of people are all the same.” Certainly, for the hundreds of thousands of older workers on retirement benefits who can now get unemployment benefits if they are laid off, the results of this campaign will not look small.