Unemployment levels are the highest since the early 1990s. Pressure on systems throughout the country have ravaged the funds of five states to insolvency. Another 13 risk going broke. Such states are having to double unemployment taxes to avert a collapse of their systems.

Maine – even with some of the country’s lowest incomes – is on the bright side of this dilemma. The balance in its unemployment trust fund is more than $400 million, giving the state enough to pay benefits for another 40 months (the national average is only 8.9.) Maine has one of America’s healthiest systems, despite lower unemployment taxes than most states.

The unemployment fund stands in stark contrast to its condition a decade ago, when despite being at an economic highpoint, Maine’s fund was teetering.

How it recovered was no accident. It was the outcome of years of planning that culminated in reforms enacted just 10 years ago by the Legislature. Were it not for these changes, the state’s fund would likely be bankrupt today. How a poor state like Maine avoided this fate is attributed to one gifted administrator: Gail Thayer, the long-time director of the Unemployment Compensation Bureau.

Though the Legislature officially changed the law, it did so only after Thayer’s exhaustive analysis. She responded to questions and concerns of legislators through a mastery of print outs, graphs and fiscal projections. A popular question, for example, concerned how her proposed changes would impact rates paid by a specific company in Maine.

It was Thayer who always had the answer.

She laid the groundwork for the 1999 reforms in the late 1980s, a couple of years after she was named to head the bureau. This was the capstone of a career that began as a worker at Lewiston’s Lisbon Street “Job Service Office” in 1975, the year after she graduated college.

Though Thayer retired in 2000, after her long-sought reforms were enacted, she remains flooded with thoughts of her eventful times in government. Reached at her home in Windham, N.H., Thayer recalled, “A less stubborn person would have given up. We literally worked all summer, all fall, all winter, 70-80 hours a week. I had my laptop with me and I was writing this thing and re-writing this thing Christmas at my in-laws, Thanksgiving. This stuff never left us.”

Thayer first had to contend with a common mindset among policymakers in “good times.”

“Nobody wanted to plan for tomorrow,” Thayer lamented. “They wanted to take what they could get today,” despite her admonitions.

Finally, with help from sympathetic legislators, both AFL-CIO and chamber of commerce lobbyists were brought together to agree on a program to save the ailing system. Also in the mix was reconciliation between the interests of big business and small business.

Here are some highlights of the reforms Thayer brought:

1) Employers that maintained a steady workforce were no longer taxed as hard as those that routinely laid off large numbers. Employers were then given incentive to retain employees, a feature that accounts, in part, for Maine having lower unemployment than the national average.

2) Allowing the state flexibility in matching tax rates to performance, which let the state build revenues in buoyant times, and brace for the downfall when the economy sours.

3) Lowering rates while maintaining revenues, made possible by broadening the wage base at which employers were taxed, from $7,000 to $12,000.

This also reduced unfairness in the system, from which laid off employees could make $16,000 from unemployment, despite their employers being taxed on amounts less than half of that; this broadening, coupled with income from enhanced reserves, reduced unemployment taxes on employers in Maine to their lowest levels in decades.

4) Wrote more specific rules by which employers could discharge employees without incurring unemployment claims. This let labor and management know where they stand when employees and employers split.

5) Determining benefits on the average of “two quarters” of wages, instead of their one quarter in which their wages were highest.

When asked her advice today, Thayer urges policymakers to “Stave off monkeying with the system and watering it down.” If she could, though, Thayer “would have had a higher taxable wage base. I would have linked the taxable base to the amount of wages you had to earn in order to get maximum benefits probably $15,000 to $17,000 a year.”

Where the recession will lead the nation remains an enigma. Less in doubt, however, is when it ends, Maine’s unemployment fund – thanks to Thayer – will not be one of its victims.

Paul H. Mills is a Farmington attorney well known for his analyses and historical understanding of Maine’s political scene. E-mail: [email protected]


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