The Reagan administration is proposing a change in unemployment compensation that could force workers who have been jobless for three months to take minimum-wage jobs or lose their unemployment benefits.
The proposal, contained in the budget amendments submitted to Congress yesterday, in effect would cut the unemployment insurance program in half.
The Reagan plan also amounts to a sort of forced reindustrialization, which the administration acknowledges is designed to speed the movement of workers out of declining industries and into areas where jobs exist -- even if they pay less.
The administration proposes changing the rules about what types of jobs unemployed workers must accept or lose their unemployment insurance benefits.
In the past, rules required an out-of-work claimant to accept "suitable work" -- defined as a job similar to the worker's previous job. if no such job was offered, the worker could draw unemployment compensation for up to six months under the regular benefits program.
The administration would change the rules to require workers out of a job for more than three months to accept any employment that pays wages either equal to unemployment benefits or the minimum wage of $3.35 an hour, whichever is higher.
In other words, unemployed auto workers or steel workers or lawyers with no other job prospects could be required to take jobs in fast-food shops or as domestics, assuming they were qualified for those jobs, or lose their benefits.
Unemployment compensation generally pays approximately half of what an individual earned. In 27 states, including Maryland and Virgin Islands, maximum allowable weekly benefits are less than the $134 that the minimum wage provides for a 40-hour week. In those states, workers with no other alternatives would be required to take minimum-wage jobs.
In other states, and in the District of Columbia were the ceiling on benefits is $196, workers eligible for maximum benefits would have that higher floor under their earnings.
According to budget documents, the proposal, which would be applied beginning Oct. 1, 1982, would save $285 million in 1983 and 1984.
"Economic events of the past decade have produced significant structural shifts in the American economy, with employment in a number of major industries declining while newer industries grow," the administration said. "The unemployment insurance system actually discourages which, while they pay lower wages initially, hold the prospect of growing employment and new careers."
Noting that the proposed change would not apply to employes on seasonal or temporary layoffs, the budget proposal added: "Individuals whose prospects for returning to their previous line of work are still not good after three months of unemployment would be expected to adjust to changed economic conditions by accepting a job that may not pay as much as their previous job."
"This change will speed the transition from jobs that are not opening up again to jobs in sectors where workers are in demand," the administration summed up.
Organized labor, which has opposed similar proposals in the past, is expected to oppose this one as well. "It would result in an overall decline in productivity to the economy as a whole and be particularly harmful to these workers," said Bert Seidman, director of the social security department of the AFL-CIO. "It would mean for many of them that they would have to move out of their houses. The whole thing doesn't make any sense."
The 96th Congress in its final days applied similar provisions, effective in April, to workers drawing extended benefits -- an additional three months' worth of benefits available to workers in areas of high unemployment. Sen. David L. Boren (D-Okla.) has proposed the same type of change the administration is recommending, Seidman said.