State Announces Large Unemployment Insurance Tax Increase for 2011

The average employer’s unemployment insurance tax is projected to go from 2.39 percent this year to 3.36 percent in 2011. Combined with an increase in the taxable wage base it means that employers will see around a 42 percent increase in unemployment insurance costs.

Individual employers will see different increases depending on their experience rating. Construction firms are historically hit harder than other employers as seasonal nature of construction means that industry generally has higher ratings due to more layoffs.

The projections came during a presentation at a joint meeting of the State Senate and House Labor Committees in Olympia. Rates will begin to go down after 2011 returning to current levels around 2014. This prompted several legislators to ask if the 2011 increase could be lowered by “smoothing” it into later years. In the last legislative session AGC supported legislation sponsored by Sen. Janéa Holmquist that would do just that – smooth out the significant increases over more years. The bill SB 6587 had broad backing from the business community but the legislative leadership refused to even give it a hearing. With what will now be two years in a row of significant increases AGC will continue to push for relief for employers.

AGC will oppose benefit increases that even in the face of looming large increases the Employment Security Department is proposing. At the recent hearing the Department announced it is looking to propose legislation next year that will increase unemployment insurance costs. In order to meet the requirements for a one-time federal allocation of $98 million the department wants to permanently expand benefit costs either by liberalizing retraining benefits or expanding part-time worker benefits.

For more information on unemployment insurance issues contact AGC Government Affairs Manager Christine Swanson 360-352-5000.