Gov.-elect John Hickenlooper last month was the target of complaints for allowing weeds to proliferate on rental property he owns in north Denver. Neighborhood residents said their the quality of life was adversely affected by the mayor’s neglect of his property.
When he moves into the governor’s mansion in just a few weeks, Hickenlooper will find himself in a new neighborhood, one populated by various state agencies and divisions. If he’s feeling neighborly, he’ll make a point of finding — and reforming — the most weed-infested.
He’d do well to start with the Department of Labor and Employment’s unemployment insurance program. In recent years, this state operation has become the bane of Colorado employers, not only raising insurance rates but also disregarding the legitimate concerns of the employers who keep our economic engine running. Just as alarming, a condescending attitude toward business has spread, like the crabgrass in Hickenlooper’s lawn, throughout the agency.
Colorado businesses understand that the recent hefty increases in unemployment taxes are a byproduct of the faltering economy and laws regulating the unemployment insurance program. What frustrates them is that the program is administered sloppily and with too little concern for employers.
Given the state of the economy, it’s not surprising that the unemployment insurance program has focused on serving the unprecedented number of claimants requiring benefits. However, the program’s careless disregard for employers precedes the recession.
In 2005, the division failed to interpret Colorado law regarding the application of the unemployment solvency tax. This blunder inconvenienced thousands of employers who had to recalibrate their accounting systems to correct the mistake. In 2007, a folder containing voluntary tax payments mysteriously disappeared in the program’s building. It was an inexcusable failure to incorporate basic internal controls.
Then, in 2010, the division decided to unilaterally adopt changes to procedures without advice from the attorney general’s office. The previous year, the division ignored Colorado law requiring proof of legal status from applicants before they could receive unemployment benefits. Worse still, the division refuses to disclose the reasoning behind its interpretation of terminology used in the Colorado Employment Security Act, in spite of a lawsuit filed in Denver District Court earlier this year.
The federal government has taken notice. Its analysis of the Colorado Unemployment Insurance Program indicates that since 2007, the tax section within the program has been deficient in nearly all categorical rankings.
None of this takes into account the millions recently spent on the botched installation of a computer system. That system was compromised when the division’s senior management issued so many change orders that the besieged contractor had no hope of bringing the project into production.
As companies continue to lay off employees and as job growth fails to keep pace with demand, economists are debating whether limitless unemployment benefit payments represent a moral hazard by discouraging recipients from seeking employment. In conducting their research, these economists would do well to examine the senior management at the Colorado unemployment office.
It is time for Hickenlooper to eradicate the weeds at the unemployment office, beginning with the program’s senior administrators.
Jeffrey J. Martin is president of Employer Emissaries, an unemployment insurance cost- control company.
