A Few States Hold On to Unemployment Offset Laws

Ohio lawmakers turned a page in U.S. history last fall by abolishing a law that penalized many older workers when companies downsized and laid employees off. The Ohio law required the state to reduce a worker’s unemployment insurance benefits by one dollar for every dollar in Social Security retirement income the worker received.

Now, only four states—Colorado, Illinois, Louisiana and Utah—retain such laws, offsetting benefits by 50 cents on the dollar. That means if you ordinarily would qualify for $150 a week in unemployment benefits—but have Social Security retirement income exceeding $150 a week—your jobless benefits would be reduced to $75.

Such “unemployment insurance offset” laws used to be more common. As recently as six years ago, four states plus the District of Columbia deducted Social Security retirement income from unemployment benefits on a dollar-for-dollar basis, while 17 additional states docked a lesser amount, typically 50 cents on the dollar.

In 2002, AARP and the National Employment Law Project launched a campaign urging legislators across the country to eliminate these laws. Advocates for older workers said they were unfair to people who continued to work past retirement to supplement their monthly Social Security checks.

Laid-off workers themselves helped trounce the offset laws. When Norma Jean Addis of Zanesville, Ohio, wrote to lawmakers in 2002 asking about her state’s offset law, a U.S. senator sent her information saying it was intended to keep workers from drawing two government pensions. “I thought, ‘Whoa! Unemployment is not a pension,’ ” she recalls. “It’s a form of insurance that employers pay for to tide you over until you either get another job or are called back to work.”

Addis, then 72, had recently suffered the double whammy of losing a seasonal sales job and learning that her Social Security checks made her ineligible for unemployment benefits. She used her newfound free time to testify against the Ohio law at legislative hearings.

Many states enacted offset laws about 30 years ago, when a federal law required dollar-for-dollar deductions in unemployment benefits for workers who presumably could get by on their pensions or other kinds of retirement income instead. Congress amended the law in 1980, giving states the leeway to decide whether and how much to reduce jobless benefits for workers who had contributed to retirement funds such as Social Security.