A coalition of business groups sent a letter to state and federal leaders on Friday, calling for help in the face of skyrocketing unemployment insurance bills that will take many companies by surprise — especially those that thought this issue was resolved.
The state Legislature approved a measure last month, with much fanfare, that froze the rates that dictate how much employers pay in premiums into the state’s unemployment insurance fund. That legislation headed off a 60 percent increase that had been scheduled because of the amounts of money drawn from the fund during the COVID-19 pandemic.
But lawmakers didn’t address what’s known as a solvency assessment, a surcharge that’s normally used in part to cover the costs for employers who go out of business. Companies are starting to get their bills from the state Department of Unemployment Assistance, and the picture is not pretty: The solvency assessment for this year is 9.23 percent of a worker’s wages up to the first $15,000 that they earn, compared to 0.58 percent last year.
That means many companies will pay roughly 16 times more per worker than what they paid last year for the solvency portion of their unemployment bills, as state officials project a deficit in the unemployment fund of $4 billion to $5 billion. For many businesses, this could translate to an extra $1,000 or more per worker this year.
Baker administration officials said the solvency rate is computed annually, based on requirements in state law, leaving the department no discretion to change it. They said the federal CARES Act mandates that COVID-19-related unemployment claims be covered by these solvency charges. Spokesman Terry MacCormack said in an email: “The Administration is looking into this matter.”
The business groups’ letter went to the Baker administration, House Speaker Ronald Mariano, Senate President Karen Spilka, and the state’s congressional delegation, according to Jon Hurst, president of the Retailers Association of Massachusetts. Hurst’s group spearheaded the letter and was joined by 20 other groups, mostly local chambers of commerce, including those in Boston and Worcester.
They want to use some of the billions in federal stimulus funds coming to Massachusetts to partially offset the costs of this assessment, or alternatively pass new federal legislation to ease the burden. Hurst said many employers were forced by pandemic-related restrictions to lay off workers and should not bear the full brunt of the unemployment insurance fund’s insolvency. Hurst noted the solvency assessment for his organization’s payroll is rising to $9,876 from $590 a year ago.
“The reality is most businesses are probably seeing a far bigger than 60 percent increase in their UI tax,” Hurst said. “To some extent, Capitol Hill will be pointing to Beacon Hill and Beacon Hill will be pointing to Capitol Hill, about who should be covering some of this deficit. Our argument is that they both should.”