‘ HR Services ’ Category

By Martin Taylor

How many HR professionals know what your company is paying in Federal and State Unemployment Insurance (UI) Taxes?  How many of you know enough to know you should really care about this?!  UI is the proverbial step-child of whatever function or department in your organization it happens to land.  But the step-child wants to be heard and is screaming at the top of its lungs in all fifty states.  So if you haven’t heard it, don’t wait for someone in the C-Suite to ask you what all the noise is about.

If your organization saw UI benefit charges go through the roof in 2009 and now have been blind-sided in 2010 with UI rate increases, then prepare to be steamrolled in 2011 and beyond.  In today’s economic environment of unemployment in double digits in many states, company UI program improvements made now will not be realized for several years…..but they need to be made! 

For years companies viewed UI taxes as just another required check to write and moved on.  But now CFO’s are asking Controllers, VP’s and HR execs, and whoever else is within shouting distance how did this happen!  To further validate this pressing issue, one company we know saw their unemployment claims increase 57% from 2007 to 2009, but their unemployment charges increased exponentially by 139% during the same period!

 To put it in perspective, here’s some recent information from the Congressional Budget Office:

“Congressional Budget Office (CBO) has issued its budget and economic outlook for fiscal years 2010 through 2020.  The report concludes, in part, that unemployment taxes will increase from $38 billion in 2010 to $75 billing by 2013 and continue to rise to $84 billion by 2020. The $37 billion increase from 2010 to 2013 represents a 97% tax increase.  This steady rise in costs will balloon to 121% by 2020.

(From CBO’s 2010 to 2020 Economic Outlook Report dated February, 2010) 

An employer’s unemployment rate is determined not only on the employer’s individual experience, but on the health of the states trust fund balance.  As of this date, 32 states (including Virgin Islands) have borrowed federal funds in order to pay unemployment benefits.  A total of 12 states have borrowed in excess of $1 billion.  This is causing the FUTA (Federal Unemployment Tax) fund to be depleted which will require increases in the FUTA tax rate to replenish the fund which will impact states even further. To borrow a phrase, “there ain’t no free lunch”! Those “free” extended benefits will eventually come back to bite employers.  Stating the obvious, the entire system is virtually bankrupt, underwater, and employers are holding the toxic mortgage with no bailout in sight.  

So, if you see this as a call to action, and not quite sure where to start, HCI has deep expertise in this complex program where 50 states administer 50 different programs, all called UI.  Follow the link below to sign up for our free webinar on How To Control Your UI Costs NOW!     

Thursday, April 22, 2010, from 2:00 – 3:00 p.m. EST on the topic, Unemployment 2010:  A Call to Action.  The webinar audio and PowerPoint presentation can be accessed at:         

            Audio Conference

            Dial-in Number:             1 (605) 715-4970

            Guests’ Code:               1039915 

            Webinar Website

            Webinar Address:          http://hci-chaffin.glance.net?key=0103