If allowed to go into law by the governor, it will be the first time that Alaska's unemployment benefits are updated in 17 years. They were last increased in 2009, through a bill signed by former Gov. Sarah Palin.
At the time, the $370 cap on weekly benefits was meant to replace half of most earners' wages, a common benchmark for unemployment insurance. Since then, wages have increased substantially while maximum unemployment benefits have not. That has left many Alaska workers without sufficient benefits to contend with temporary job loss.
"In no state is unemployment insurance more important than in Alaska, because we have the most seasonal workforce in our construction, oil and gas industries," said Rep. Zack Fields, an Anchorage Democrat who pushed for the higher cap. "When you think about a worker who's on surface transportation projects in the summer, they are laid off in the shoulder season for an indeterminate period of time, until the ice road season is ready on the Slope."
"One of the reasons we have been losing skilled trades workers is they can't make ends meet, and in every other state in the Pacific Northwest they can earn a lot better wages," said Fields.
Alaska's current maximum unemployment insurance benefit is roughly a third of the maximum benefit offered in Washington state. Fields said that discrepancy is contributing to the outmigration of skilled trades workers.
The Alaska Unemployment Insurance Trust Fund now has far more money in it than needed. At over $800 million, the fund had $250 million above its statutory target as of last year, according to Division of Employment and Training Services Director Paloma Harbour. Harbour said contributions to the fund could be zeroed out for several years without it falling below the statutory target. That's because the fund is capitalized with a contribution based on a percentage of wages. While wages have gone up since 2009, unemployment benefits have not.
If the cap on maximum benefits had been adjusted for inflation since 2009, the benefit this year would be $525 per week, according to Harbour.
The legislation that passed last week seeks to bring benefits closer to what they were in 2009, when accounting for inflation. It also increases the weekly benefit payment per dependent from $24 to $72, meaning a parent of two children who loses a job may be eligible for $144 in additional weekly payments, on top of the base benefit. The bill would also authorize the state labor department to update the cap annually to keep up with rising wages.
The bill, which passed in the final hour before lawmakers adjourned for the year, was the result of a winding legislative process that included a failed attempt to initiate a new paid parental leave program.
It was all "part of the public policymaking process, where you have folks with different backgrounds and different experiences" contributing, said Rep. Carolyn Hall, an Anchorage Democrat who led the work on the legislation.
Paid Parental Leave
Hall introduced House Bill 193 last spring with the goal of creating a statewide benefit that would allow new parents to recoup at least some of their wages while taking time to bond with their children.
The U.S. is the only high-income country that lacks a national paid parental leave system. That leaves families on their own to balance the burdens of welcoming a new child without guaranteed pay during time taken off of work. More than a dozen states have enacted mandatory paid parental leave programs.
Hall, a freshman lawmaker representing West Anchorage, wanted Alaska to join that list. She found that many legislators from both sides of the political aisle agreed with her.
"It seems like everybody wants a paid parental leave program. They really, earnestly do," said Hall. "But where is the money going to come from?"
Her solution involved leveraging the overcapitalized unemployment insurance fund. Tweaking contribution rates meant that Alaska employers and employees could divert some of the money they had been sending toward unemployment benefits to the new parental leave fund, initiating the program with no new taxes.
Under the proposal, new Alaska parents in 2030 would have begun receiving paid parental leave benefits for up to 12 weeks.
"The program would have been self-sustaining," said Hall. "Employers and employees would have seen no change. That's a really unique unicorn policy."
But during the final multi-hour floor debate on Hall's bill in the House, lawmakers voted 22-18 to amend it to also eliminate sick leave — adopted by voters in a ballot measure in 2024 — for seasonal workers and employees of small businesses.
That change, taken from a previously introduced bill, was adopted with support from all GOP minority members, along with three key House majority members: Speaker Bryce Edgmon, I-Dillingham; Majority Leader Chuck Kopp, R-Anchorage; and Rep. Louise Stutes, R-Kodiak.
Hall said she immediately knew the change to sick leave would become a "major hurdle" that was going to "cause some issues" for the bill's passage in the Senate.
Small and seasonal businesses across the state had raised concerns about the challenges created by the mandatory sick leave program. But the changes adopted in the House "went too far" for key members of the Senate majority caucus, said Juneau Democratic Sen. Jesse Kiehl.
The paid parental leave bill — which otherwise had the support to pass the Senate, according to Kiehl — stalled as lawmakers faced down the end-of-session deadline, without sufficient time to negotiate a compromise on sick leave.
So on the last day of the session, looking to salvage the increased unemployment insurance benefits, Senate members tacked them on as an amendment to a bill intended to regulate travel insurance.
"Lots of things bubble around at the end of session, and lots of folks look for titles and subjects that could fit another piece of legislation," said Kiehl.
The amendment and the bill itself passed the Senate in 14-6 votes, with support from majority members and opposition from the all-Republican minority.
Alaska's unemployment benefits were "back of the pack, near last in the nation. Now, we'll be just a little shy of the midpoint," said Kiehl.
Minority member Sen. James Kaufman said he didn't believe "we should be taking pieces and parts and stuffing them into this bill."
"I think it's bad practice and bad harbinger for the future," said Kaufman.
The final measure, including the unemployment benefits update, passed the House one hour before it adjourned for the session in a 34-6 vote, with opposition from several minority Republicans.
Hall, who is running for reelection, said that she plans to reintroduce the paid parental leave legislation next year.
Dunleavy's Proposal
Alaska's overcapitalized unemployment benefits account has not gone unnoticed by Gov. Mike Dunleavy, who earlier this year proposed using the excess funds to increase investment in workforce training programs, rather than upping benefits.
Dunleavy relied on a longtime acquaintance, Robert Boyle, to present his proposal to lawmakers. Boyle worked with Dunleavy early in his career as an educator in rural Alaska school districts, and later resigned amid controversy from his post as Ketchikan superintendent. Dunleavy's office has given Boyle $268,000 for consulting services related to advancing workforce-related initiatives since 2023.
But Dunleavy's proposal stalled in the House and Senate, and never came to a floor vote in either chamber. Hall said legislators supported increased investment in workforce training but sought to prioritize what they saw as the long-overdue boost in unemployment benefits.
Dunleavy has not commented publicly on whether he will sign into law the increase in benefits. His spokespeople did not immediately respond to questions about Boyle's work and workforce-related initiatives.
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