How much and for how long will rates increase?
A lot, for a while. A recent
report from the State Comptroller says:
“If New York does not repay its outstanding advance by November 10, 2022, the federal UI tax rate will increase by 0.3 percent to 0.9 percent for 2022. This would represent an additional annual federal tax payment of $21 per employee; compared to 2020, the new rate would represent an increase in total tax payments of 30.5 percent for employers required to pay the highest UI tax rates and of 182.3 percent for those who currently pay the lowest rates. If New York continues to hold an outstanding balance on January 1, 2023, employers’ federal tax rate will go up to 1.2 percent, representing an additional cost of $42 per employee over current levels. This additional cost will increase by $21 per year for each employee as long as New York retains an outstanding balance on November 10 in the relevant tax year.”
The higher rates will last many years. As Figure 2 shows, the state has barely put a dent in the debt balance. The Comptroller’s Office tells us that after incurring similar debt during the Great Recession, New York did not pay off its balance until 2015 after a concerted repayment effort from Albany. Unless the state legislature acts on this issue, we can expect higher rates for the foreseeable future.
Figure 2: New York’s Unemployment Trust Fund Loan Balance
