The Safety Net Is a Good Thing: York County Edition

While we celebrate the rejection of House Bill 916 this week, we should remember what is at stake when politicians tinker with the safety net. The figure below presents the annual percent change in personal income and personal income minus transfers (a proxy for market-based incomes) in York County. (Rep. Scott Perry, the sponsor of House Bill 916, represents portions of York and Cumberland counties).

A bit more explanation: personal income minus transfers is a proxy for incomes generated in the market-based economy, so as people in York County lost jobs in the 2001 and 2007 recessions, there were steep declines in market-based incomes. 

Personal income, which includes transfers like unemployment insurance, either fell less or not at all during the last two recessions in part because those who lost jobs had at least some of their income protected by the unemployment insurance system. (Pennsylvania's unemployment insurance system replaces a little over half of your lost wages.) In the absence of such protection, many families in York County would have lost all of their income in the recession. 

Unemployment insurance, thus, gives these families a temporary and modest lifeline to weather the recession, allowing them to pay their mortgages and other essential expenses until they find a new job. In this way, the benefits of unemployment insurance extend beyond individual recipients into the local community by preventing additional layoffs and home foreclosures.

House Bill 916, which failed by a vote of 79-122, would have cut unemployment benefits by about 20%. Unemployment in York County remains high at 7.2%. Even though the economy in Pennsylvania is in the midst of a robust recovery adding more jobs than it is losing each month, new workers are still being added to the unemployment insurance rolls each month. With unemployment so high, many of these newly jobless workers will be unemployed longer because the competition for new jobs is so fierce. House Bill 916 would have made the financial situation of many of these workers and their families more precarious.

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