The start of a new session puts a fresh sheet of paper in front of the Legislature, and judging by the number of bills already piling up, lawmakers are eager to fill the page. One of the most urgent ideas falls under the heading of old business, however, and that is Gov. Charlie Baker’s plan to give employers relief from hikes in unemployment taxes. Lawmakers should hurry it to the top of their list.
Baker said yesterday he is resubmitting a bill the Legislature failed to enact by the end of its last session. His plan freezes unemployment fees paid by businesses. Importantly it gives the state flexibility to issue bonds to cover federal funds received to shore up the unemployment insurance fund.
Few pieces of fiscal infrastructure have been as important these past 10 months as that fund, which pays state-issued jobless benefits. It was hit hard as precautions to check the spread of COVID-19 kicked people out of work, and as Massachusetts’ unemployment rate surged to nearly 18% last summer. It’s no surprise the account is depleted — $2.4 billion in the red at the beginning of the year, a figure expected to double over the course of 2021.
The long process of rebuilding the fund automatically shifts to employers and, at this point, places too heavy a burden on businesses struggling to keep their doors open. Without some relief those businesses were projected to face raising costs per employee of $319, on average, over the course of this year — a 60% hike. A medium-sized business with 88 workers could hire a minimum wage employee with the money it will spend covering those fee increases.
Indeed, as Chris Carlozzi, state director for the National Federation of Independent Business, pointed out last fall, those ballooning costs are a disincentive to growing the workforce. “It’s almost a Catch-22,” he told State House News Service. “You want these businesses creating jobs. Now you’re making it prohibitively more expensive to create a new job by increasing the tax on employers simply to employ people.”
Nor is it the only new cost that businesses, themselves trying to rebuild from pandemic-triggered shutdowns, will face this year. The aforementioned minimum wage grew to $13.50 per hour in 2021. Also coming online this year is the state’s guaranteed paid family and medical leave.
The state has to keep its jobless benefits fund solvent. Even though the new year has already started, it can retroactively lower the fees charged to employers, Baker noted yesterday. But it’s important for lawmakers act by early March, he said, before rate notices are sent to businesses.
The Legislature has plenty of time to act on this relatively straightforward bill, and it should. Freezing unemployment insurance rates may not be as exciting as many of the other ideas filling up a new session’s agenda, but it’s an important measure that will give businesses important relief.