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What HR Can Do to Cut Your Unemployment Costs

What HR Can Do to Help You Unemployment Costs
by Joanne Deschenaux, J.D., SHRM senior legal editor
Speaking before a session of the Society for Human Resource Management's Employment Law & Legislative Conference March 14, 2011, an unemployment insurance (UI) expert presented a bleak picture of UI costs across the country. The following sobering facts were revealed by Douglas Holmes, the president of UWC, a nationwide association that represents the interests of the business community on national unemployment insurance and workers' compensation public policy issues:
  1. State unemployment taxes increased as a percent of total wages on average by 34 percent from 2009 to 2010 and are expected to increase even more for 2011 and 2012.
  2. Thirty-two states have outstanding federal loans of $43.6 billion. The U.S. Department of Labor (DOL) projects a peak in 2013 of up to 40 states and $65.2 billion.
  3. Interest on loans is charged at the rate of just over 4 percent for 2011. Under federal law, the interest may not be repaid from the state UI taxes, so approximately $1.7 billion will have to be paid from other sources. Employers in 19 states will pay a special assessment to cover this cost (Alabama, Arkansas, Arizona, Colorado, Connecticut, Delaware, Florida, Hawaii, Indiana, Kansas, Michigan, Minnesota, Missouri, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, and Wisconsin).
  4. The first interest payment from states is due Sept. 30, 2011. Interest continues as long as loans are outstanding.
  5. Federal Unemployment Tax Act (FUTA) increases in borrowing states have begun in Michigan, Indiana and South Carolina, and are projected in 24 states for 2011, costing more than $2 billion in additional FUTA taxes.
  6. Spending on unemployment compensation is at an all-time high, jumping from approximately $31 billion in 2008 to $120 billion in 2009 and $160 billion in 2010.


 


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