Oregon Public Broadcasting

The state will release the latest unemployment figures Tuesday morning. About 200,000 Oregonians are expected to be out of work, and about 80 percent of them will collect benefits.

This month marks the 75th anniversary of the bill that established the unemployment benefits program. Kristian Foden-Vencil reports on the history of the program.

Social Security Online

President Franklin Delano Roosevelt signs the Social Security Act on August 14, 1935.

Franklin Delano Roosevelt signed the Social Security Act in 1935 as part of the 'New Deal.' One of the programs it created was unemployment benefits -- a payment to workers who lost  jobs through no fault of their own.

It took a few years for each state to put money into the new benefits fund. So it wasn't until 1938 that Oregon cut it's first unemployment check.

It was for the grand sum of $15 and went to James H. Allen of Ontario.

85-year-old Elise Swan remembers when the law came into being. She was only 10 at the time. Now, she sits in a white robe with a plastic oxygen tube.

But as a youngster during the Depression, she remembers unemployed men coming to the house. Her father was the editor of The Cottage Grove Sentinel Newspaper, which still stands in the same building on 6th Street.

Elise Swan: "We were right by the railroad tracks that ran through Cottage Grove. And we had hobos that came to the door all the time. And my mother would feed them but they had to do something, like chop wood or maybe spading the garden and so forth in return for their meal."

Swan says there was no money to hand out, so the men would work for a while and then move on. She also remembers the emphasis on growing your own food and wearing second hand clothes. 

Swan also remembers an undercurrent of talk about the need for social change.

Elise Swan: "There was a tenor in the air about the fact that some people didn't have as much as they had before hand. Or the future didn't look too good or that kind of thing hanging over your head."

She says some people dismissed unemployment benefits as charity. But she recieved it in the 1940's, after she lost her job as a pipe welder's assistant in Portland's shipyards.

Elise Swan: "I think people now step up and get the unemployment rather than backing off and not getting it."

Kristian: "Do you remember people backing off and not getting out of a sense of pride?"

Elise Swan: "I think so. It's a little tricky. But I feel that if people have paid into it, they should get it back when they are in need of it."

The tax is paid by employers. Some of the money goes to the federal government for administration costs.

But the bulk goes to states that save it in a big fund.

In Oregon, that fund stood at about $1.5 billion a couple of years ago. It's now less than half of that and is  predicted to drop as low as $400 million by next Spring.

Then, says state economist Craig Spivey, it should start filling up again.

Craig Spivey: "It's a self-adjusting, self-correcting type of trust fund. And because of it, Oregon has one of the healthiest trust funds in the country. And we're looking at, during this period of economic downturn, right now 35 states across the United States are borrowing money in order to pay their unemployment benefits."

Those states have a flat tax, where payments in don't change. Oregon used to have a similar system.

In the 1950's, Oregon’s  fund went about $25,000 dollars into the red. Then, when the same thing was about to happen in 1971, the legislature changed the payment system.

Now, the lower the fund goes, the more money employers have to pay in. It's an eight-tier schedule.

Craig Spivey: "In the mid 2000's employers were able to pay at a schedule two, which was one of the lowest schedules. Now the trust fund has gone down quite a bit and we're starting to ramp that up and employers are paying in at a schedule six. That'll probably go to schedule eight next year."

The state is handing out about $50 million a week in unemployment benefits -- or an average of $1,300 a month per worker.

But, Spivey says, for every dollar the state spends, there's a local economic benefit of one-dollar-and-sixty cents. That’s because food, clothes and other essentials are bought locally.

Craig Spivey: "There's been some rule changes in how claims are adjudicated and things like that but for the most part, the main structure of unemployment insurance has virtually stayed the same for 75 years."

The current economic downturn, however, is testing the fund in many states.

And Spivey says some are looking to Oregon's payment system as a model going forward.