BOSTON — Gov. Charlie Baker says he is working on a plan to offset massive unemployment insurance rate hikes for businesses that are set to go into effect in two months.

Baker said he's discussing with legislative leaders ways to "mitigate" the impact of new rates being charged to employers to replenish the state's unemployment insurance trust fund, which is more than $2.5 billion in the hole following a crush of layoffs and business closures last year caused by the pandemic.

"We do have some ideas about how to mitigate some of the hit, especially on small businesses who saw very big increases in their rates," Baker told reporters on Tuesday. "One of the reasons we asked for the delay in making payments was so we can process some of these ideas. We'll put them forth soon."

Business owners were caught off guard last week when they received notice that their rates would be skyrocketing, even after Baker signed legislation that was meant to lower planned increases in state unemployment insurance rates.

The rates are going up because so-called solvency rates — which are part of the complicated formula used to calculate how much employers pay into the unemployment insurance system — went up from 0.58% to 9.23%, an increase of 1,491% because of the financial hit of the unemployment trust fund.

The state paid out nearly $6 billion in jobless benefits last year as hundreds of thousands of workers were sidelined to prevent the spread of the virus.

The Baker administration has borrowed more than $2.2 billion from the federal government to continue paying claims.

Employers were facing a hike in unemployment insurance taxes of up to 60% this year to help replenish the fund that covers claims.

Legislation signed earlier this month by Baker was supposed to reduce those taxes for many employers. The measure adjusted down scheduled increases in unemployment insurance taxes for the next two years, and authorized the state to borrow up to $7 billion from the federal government to keep jobless benefits flowing.

But Beacon Hill policymakers apparently overlooked — or ignored — the impact of the solvency rate on insurance rate premiums.

"Employers were expecting a slight increase but nothing this dramatic," said Chris Carlozzi, state director of the National Federation of Independent Businesses. "Some of the bills our members are seeing are just absolutely outrageous."

While the Baker administration has delayed the due date on those payments until June, business leaders say Beacon Hill needs to move quickly to sort out the mess.

They want the administration to tap into more than $4.5 billion in federal funds the state expects to get from the latest stimulus package, to pay down the trust fund deficit and help offset the pending unemployment insurance rate increases.

"These layoffs were not the fault of employers, they were triggered by government shutdowns and restrictions," said Jon Hurst, president of the Retailers Association of Massachusetts. "So the state and federal government should be responsible for covering some of these costs. They need to pay their fair share."

Christian M. Wade covers the Massachusetts Statehouse for and its sister newspapers and websites. Email him at

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