That has created a Catch-22 situation in our state. Washington employers pay unemployment taxes based on how many people they lay off over the course of a year. The recession has forced so many layoffs, though, many employers have had triple-digit hikes in their unemployment insurance taxes and some have seen their UI taxes jump by more than 1,000 percent.
Ironically a benefit intended to help jobless people is making it harder for them to get jobs.
Unemployment insurance isn’t the only cost employers are struggling with. Washington is a high-cost state in which to do business. Our tax system is based on the volume of business, not profitability, as in Oregon. Unemployment benefits and corresponding taxes on Washington employers are among the nation’s highest — in the top five. And workers’ comp costs are more expensive than in most states.
Add them together and Washington employers face costs that often lead to reduced work hours, layoffs and delays in hiring.
This year employers are asking the Legislature for relief. They’re requesting a temporary reduction in UI premiums until the economy improves. After recovery the employers will repay that money into the state’s UI trust fund to ensure our state can pay unemployment benefits without borrowing from the federal government.
Union leaders want a trade-off for temporary rate relief — higher unemployment benefits. While we all would like to help unemployed families, adding $15 per week to unemployment benefits for each child adds millions in costs and will further raise UI rates. The end result will be the same: fewer jobs.
When high UI costs stifle an employer’s ability to create jobs, no one wins. After all, a paycheck always beats an unemployment check.
Don Brunell is the president of the Association of Washington Business. See www.awb.org.