NFIB will fight to not have that cost fall on small businesses surviving the pandemic
As if there was not enough for small business owners to worry about with all the COVID-related regulations, lagging sales and a very slow reopening process, there is a larger crisis looming on the horizon. Projections show the Massachusetts Unemployment Insurance Trust Fund will almost be at a $2.5 billion deficit at the end of 2020 and nearly $5 billion in the red by the end of 2021.
Massachusetts already began borrowing from the federal government in July after the state trust fund was depleted. For two months straight, the state has now reported the highest unemployment rate in the nation with new claims being filed daily.
As you are well aware, unemployment insurance taxes fall squarely upon the shoulders of Massachusetts employers. Not only will employers face higher state UI taxes but will also be forced to pay back the federal government loans used to replenish the depleted fund. Those payments start in 2021.
It is anticipated both state and federal unemployment taxes will increase in 2021 to ensure the trust fund becomes solvent. The Department of Unemployment Assistance projects a schedule change from the current schedule E to schedule G in 2021 and will remain at those rates until at least 2024.
What does that mean in real numbers? Under schedule E in 2020 the average UI costs for an employee was roughly $539, under schedule G it is estimated increase to $858 in 2021, $913 in 2022, $917 in 2023, and $925 in 2024. This is only state unemployment taxes and does not include potential federal fees.
NFIB feels it will be near impossible for small businesses to grow, produce new jobs and help the state economy recover if it becomes increasingly expensive to create new positions.
Massachusetts has been ranked dead last by the Tax Foundation for UI taxes in 2020 due to our generous benefits, the extended duration, and lax eligibility requirements. NFIB will advocate for long overdue unemployment insurance reforms as a needed solution to this massive problem.