Administration to Cut Regulation on Unemployment Pay for Family Leave

The Bush administration wants to repeal a never-used Clinton-era regulation that lets states provide unemployment pay to workers who take unpaid time off to care for a newborn child.

Labor Department officials, citing poor economic conditions, said they are acting to repeal the Birth and Adoption Unemployment Compensation Rule to protect states' unemployment insurance trust funds for laid-off workers, even though no state has chosen to pay for leave with those funds.

The regulation gave states the option to amend unemployment compensation systems to provide the paid leave and were offered help from federal labor officials in assessing the long-term burden of higher costs.

Only California offers such paid leave, and it is not financed from unemployment insurance reserves.

Repealing the rule "removes the impetus for individuals, be they members of the public or legislators, to encourage the use of the trust fund specifically for this purpose,'' said Emily Stover DeRocco, assistant labor secretary for employment and training.

AFL-CIO President John Sweeney criticized the proposed repeal. It "reflects profound mistrust of states to make wise choices'' in administering their unemployment insurance programs, he said.

In 2000, former President Clinton announced the new regulations during an economic boom when states' trust funds were flush because of record unemployment. The nation's jobless rate that year hit a 30-year low of 4 percent.

In a radio address, Clinton said he sought the changes because many workers could not afford to take time off without pay as stipulated under the 1993 Family and Medical Leave Act, the first bill he signed as president.

Bush Labor Department officials say that now, in uncertain economic times, many states are reporting low reserve levels in their trust funds. Last year, 28 states had less than 12 months' benefits in reserves, and 13 states raised taxes in January to cover benefit costs, the department reported.

The repeal, which won't build reserves because no states are spending they money on leave, "essentially proclaims the integrity of the unemployment insurance trust fund for its statutory purpose,'' DeRocco said.

The nation's unemployment rate climbed to 5.7 percent in October. November's rate will be announced Friday.

The U.S. Chamber of Commerce praised the Labor Department's proposed repeal, saying the rule was "bad public policy and probably illegal.''

Tapping the unemployment insurance fund for maternity leave amounts to "pulling the rug out from under people who are unemployed through no fault of their own and looking for a job,'' said Randy Johnson, the chamber's vice president for labor policy. That, he said, "is not a smart way to help any worker."