Georgia employers face rising unemployment insurance taxes

Georgia employers are almost certainly going to pay higher unemployment insurance taxes next year and jobless workers may see a cut in benefits.

Mark Butler

Mark Butler

That’s because the state owes $721 million to the federal government — money it borrowed to pay its share of unemployment benefits. Only the first interest payment — $22 million due next month — has been accounted for.

I sat down with state Labor Commissioner Mark Butler to see how he plans to repay the principal and make future interest payments. Butler has assembled a task force in his department to come up with a long-term game plan. The task force, which has been meeting since May, plans to offer its recommendations to Butler later this month. After he decides on a course of action, the ball will be passed to the governor and state Legislature, which will have to act when it convenes in January.

But before we get into what the task force is considering, here’s a little background.

Georgia, like most other states, started borrowing during the Great Recession so it could continue to pay benefits to laid-off workers. We’re not talking about extended federal benefits here, which give some jobless workers as many as 73 weeks of additional coverage after the state’s payments are exhausted. We’re talking about the state’s responsibility, which is the first 26 weeks of benefits.

To cover those 26 weeks, Georgia employers pay unemployment insurance taxes into a special fund. Annual payments average $187 per employee. But, with our abnormally high unemployment rate, the fund started running out of money in December 2009. That’s when the first borrowing occurred, and the tab is now $721,080,472.

To repay the money, the task force has been considering many options. Not all will be recommended, but more than one option will be needed to cover the debt. Ideas include:

– Raising employer taxes, which Butler said he will try to limit as much as possible so job creation is not stifled. Companies pay two unemployment insurance taxes. Because of the outstanding loan, the federal portion of the tax will rise next year by $21 per employee, officials said. The state’s portion of the tax, which increased 35 percent this year, could rise again. Butler already is empowered to increase the tax rate by another 15 percent, but he’s leaning against doing that.

– Cutting weekly jobless benefits, which average $260 now.

– Reducing the number of weeks — now 26 — that state benefits are paid.

– Revamping the current system. For example, employers only pay taxes on a worker’s first $8,500 of annual income. That could be raised under one proposal being considered.

– Borrowing money to repay the entire loan. But there are legal complications, including the likelihood that a constitutional amendment would be required to do that.

There is a sliver of good news amid these depressing options. For the past three months, the state has not needed to borrow more money, largely because initial claims have declined.

“We should have enough money to pay unemployment benefits [without borrowing] for the rest of the year,” Butler said.

Here’s hoping he’s right.

- Henry Unger, The Biz Beat

For instant updates, follow me on Twitter.

75 comments Add your comment

James

August 9th, 2011
6:36 am

Hope and Change for America?

bagger

August 9th, 2011
6:45 am

cut off the parasites, let them eat cake

crystalmille

August 9th, 2011
7:08 am

Common guys the universities are not for everyone these days, it is very costly just accept, only alternative now is something called “High Speed Univ” where you pay much much less but get degree faster

JustMyOpinion

August 9th, 2011
7:17 am

Everyone who receives these benefits does not want to receive a handout, it’s just sad that they are reduced to $260 per week.

The key is employment

August 9th, 2011
7:26 am

People who had been working, working their whole lives, lost their jobs in this recession, they’ve chewed through their savings in an effort to keep their homes and feed their families.

Now, Mark Butler wants to cut their puny $260 per week benefit. What a load of …!
http://www.dol.state.ga.us/contact_commissioner.htm

P.S. Does he really have to look so smug in his photo?

Semi-Retired

August 9th, 2011
7:40 am

I’m collecting a whopping $330 a week!

Tim

August 9th, 2011
7:40 am

Henry, you didn’t go far enough back in your background. If you look back to 2006 or so, you will see that we had a surplus of funds in the unemployment fund. The legislature decided back then that there was too much surplus – there would be no rainy day to have to save up for. So they cut the unemployment insurance fee charged to business, and by the time the recession hit, there was a very small surplus. Lack of planning caused a lot of the debt owed – had the unemployment insurance rate stayed the same, Georgia would have weathered, or almost weathered, the recession.

Tom E. Gunn

August 9th, 2011
7:52 am

Also, the state is VERY liberal in allowing people to collect. I have saw first hand people dismissed for excessive absence, bad job preformance, etc. go down and be awarded compensation.

Laurie

August 9th, 2011
7:52 am

Increase the UI tax on companies that outsourced or relocated facilities to other areas (Mexico, Canada, or India for example). They obviously contributed to the problem to gain more profit, so let them pay a greater share of the burden.

Karl Marx

August 9th, 2011
8:03 am

I agree with “bagger” Cut off the parisites, Bank of America, Fanny & Freddy, Wells Fargo, Wall Street, AIG GM, GE, and The Federal Goverment is a good start.

Bobby

August 9th, 2011
8:04 am

So, Mark Butler, a Republican Labor Commissioner is considering raising taxes on employers. Interesting that while the Tea Party holds the nation hostage, on the State level Republicans raising fees, taxes, reinstituting Georgia 400 tolls that should have expired based on earlier promises when the Ga 400 Tollway was constructed, and Georgia Power rates for customers ever which way they can. Republicans are willing to take away benefits for the middle class at the Federal level and raise taxes on the middle class at the State level.

Working gal

August 9th, 2011
8:07 am

I have worked at my company for 15 years. If I get laid off and it takes me months to find a job. You can be sure that I want those benefits available to me. Raise the employers tax. Maybe I won’t get that 1% percent raise next year. So what at least I can pay my mortgage and bills. Maybe the lenght of collection can be tied to how long you have been gainfully employed.

RapidEvictor

August 9th, 2011
8:10 am

It’s $330 without withholding taxes removed, it’s considered income, the first $2400 isn’t taxed, it’s $260 if you opt to have taxes taken out before it’s gets to you. If you opt to not have taxes taken out you will wind up paying them when you file next year. Some people are smart enough to prepare for this others will be shocked when they see they aren’t getting a refund (it’s better to owe them, not them owe you!) but owe a hefty amount to the IRS. No one is living high on the hog on $260 a week, for most it isn’t even enough to keep them afloat.

carlosgvv

August 9th, 2011
8:30 am

Now Corporations have even more excuses for not hiring and instead, piling more work on their existing employees.

AR

August 9th, 2011
8:35 am

This economy has effected everybody but the RICH!!!! When will this country stop blaming the Democratic or Republicans? This issues involves choices far beyond the people of this country. I say fire everyone of these politicians and just have a liberal government. Only the rich get richer and the poor get poorer. Just snatch everything from us and be done. Bump this back and forth. Thank you POLITICIANS for you big screw-up. Now blame us!!!!!!!!

WAW

August 9th, 2011
8:37 am

My guess is that most of you people wise-a$$ing about “cut ‘em off” are on the government dole yourself. Most Tea Party people I know are “on the take” from the government on way or the other. Retired military and teachers top the most vocal I know. Your day may not be far away.

Buzz G

August 9th, 2011
8:37 am

We have to do what we can to keep those snouts at the trough. Its a matter of fairness.

destin dawg

August 9th, 2011
8:41 am

Bernie Marcus and Ken Langone started Home Depot here in Atlanta in the 70’s… and other businesses… created thousands of jobs… paid Huge taxes.. eventually have given million$ to charity.. hospitals.. etc.. they say they couldn’t start Home Depot now with all the regulations and taxes… also said Obama will go down in history as the worst President of all time !!

Fannie

August 9th, 2011
8:47 am

By all accounts, unemployment compensation from the State and the Federal governments has been more than generous. Like all things, though, it cannot continue indefinitely. I will not call those that receive them “parasites”, but we should not declare that these people are now unemployable and should receive benefits… which are equivalent to minimum wage…indefinitely.

destin dawg

August 9th, 2011
8:53 am

unemployed should be required to do community service/work to get benefits…

EX DOL Wlorker

August 9th, 2011
8:56 am

The u/i system is a scam. When folks find out they can get 99 weeks of benefits they quit looking. They work under the table and get benefits, they work a job and continue to call in for benefits and most never get caught, They lie,lie and tell more lies to appeal officers so even after quitting or being fired they get benefits. The entire system is an extension of the welfare program. I am not talking isolated incidents here, get the DOL workers in the backroom and they will tell you story after story. The way to pay back the system is to recover the money from the cheaters but there is little will to do that. Prosecutors never prosecute any of these folks. One of the reasons I left is because my conscience wouldn’t allow me to con tinue. People would have a million excuses not to take a job. The entire system has a cancer that needs to be cut out-fraud,waste and abuse to the ‘umth degree!

Clancey

August 9th, 2011
9:00 am

“There is a sliver of good news amid these depressing options. For the past three months, the state has not needed to borrow more money, largely because initial claims have declined.”

What is “good” about people being denied unemployment? Also, gotta remember that those people aren’t counted in the unemployed, since they aren’t on the rolls.

Makes things look good for the State and Feds, doesn’t it!

RY

August 9th, 2011
9:02 am

I know this is “The Biz Beat” Henry, but considering the great state of Georgia has yet to decide on a solution to this problem, couldn’t the title of your column just as likely be “Georgia’s Unemployed Face Cut in Benefits?” If the General Assembly’s track record in recent years has taught us anything, it’s that balancing the state budget on the backs of the middle class and working poor is almost always their first option!

reality

August 9th, 2011
9:04 am

The government just doesn’t get it…we need companies hiring and we need it now!!!…all the public keeps hearing about is cutting more off or helping people who are already employed(Obama’s plan to take less taxes out of paychecks). Corporations are motivated by $$$!!! Most are sitting on huge cash reserves..incentives to have companies pay less in taxes need to be given based on hiring…in turn our government needs to tighten their belt and start slashing the excess. Americans have been doing that already since 2007.

Also, our government is way behind in the times. the stimulus package to build bridges was a great idea for the great Depression when the workforces consisted of skilled labor and not much diversity. Today, that plan was doomed from the start. Man has been replaced by machinery and the work force of today is not ONLY in construction.

This government needs creativity and a economic plan to MAKE companies WANT to hire again.

Point/Counterpoint

August 9th, 2011
9:10 am

Tom E. Gunn – “Also, the state is VERY liberal in allowing people to collect. I have saw first hand people dismissed for excessive absence, bad job preformance, etc. go down and be awarded compensation.”

Amen! The burden of proof falls 100% on the employer. Trey story, I received a notification of a UI hearing THE DAY I WAS SUPPOSED TO ATTEND WITH MY CLIENT. Granted, it was probably an error due to mail delivery being delayed over a holiday. However, i called the DOL and told them that I couldn’t appear, becuase 1. My client was on vacation (keep in mind this was July of 2009) and 2. I didn’t have sufficient time to prepare for the Appeal. After informing them that I had just gotten the notice that same day, I was told that I had to show up or forfeit. So I took the employee file and had to fend for myself. I presented time records going back 6 months that clearly showed the employee had routinely come in late, called off without notice, was a no call no show on several occasions. All documented in the time record. Granted, I had repeatedly told my client in the past to terminate, but they failed to do so. So the hearing officer looks at me and asks me if i have any witnesses. After explaining to her that i just received the notice and didn’t have time to preoare, she reprimanded me for not having any witness to verify the documents. I told hr that the time report is a computer generated document and an accurate record of the employees attendance for which he was terminated. Anyway, the employees defense was that he was a single parent and needed to take timer off anytime his child was sick or if he couldn’t get a sitter. Despite the recorder time violations and many pleas to the Hearing officer, we received notification that the employee was granted benefits due to “lack of evidence” for termination. All totaled, the employee received over $22,000 in UI while working for a friend who paid him under the table. You want to save money on benefits? Give to ONLY THOSE WHO DESERVE THEM!

mike

August 9th, 2011
9:10 am

Interesting how people blame the laid off workers for the problems with the UI system. I am still waiting on all the jobs the repubs said were coming once they got in office. I guess they were referring to all the fruit and vegetable picking jobs in middle and south Georgia. I see on the national level the so called job creators seemed to have created all the jobs overseas. But it is better to blame the middle class for this economic crisis.

Edward

August 9th, 2011
9:15 am

It is not in the capitalist/corporatist interest to hire more employees because that cuts into profits. Profit and returns to investors and salaries to CEOs are the top priority. As long as the fascist/capitalist/corporatist atmosphere is dominate, unemployment will continue to rise. Want a job? Move to India.

Worked Since I Was 10

August 9th, 2011
9:26 am

I am 64 years old. Until March of this year, I have worked everyday of my life since I was 10 years old. When I left one job, I had another lined up. I always earned a buck! I never had to file for unemployment benefits, until I was laid off from my job in which I performed exceptionally well. I was laid off because the company changed its customer market and started focusing on new skill-sets for its employees. Rather than re-train me in these new areas, the company decided it was cheaper for them to lay me (and several others) off.

So, to you bagger and to any others out there who think any of us now receiving our whopping $260 per week average benefit are “parasites,” I say, “Hope you’re never in a situation where you’re forced to file for the help.” I have paid taxes, served my country in the Vietnam War and raised children who have turned out to be excellent citizens. So, bagger, what have you done to make this country better?

You can kiss my behind.

It's Temporary Assistance

August 9th, 2011
9:59 am

I’ve been working since I was 12 (had a paper route) and continued to work since then. I lost my job in March 2011 and had to apply for unemployment benefits. I received $330 per week in benefits. I’m not sure why people think the majority receiving this small amount of money is scamming the system and living it up. Thank God I had savings to keep me afloat in paying my mortgage and household bills. Thank God for the food stamps I was able to receive in order to eat.

Every single day that I was laid off, I applied to numerous jobs, went on countless interviews and in just 2 months, I was offered a great position making more money than I’ve ever made, which I gladly accepted. Not everyone is looking to get over or think they’ve made it to easy street when they receive benefits. Once I started my job, I reported my income to unemployment so that I would not receive funds I was not entitled to. I also did not receive food stamps anymore. It was only temporary until I got back on my feet.

Who in their right mind would prefer to try to live off of $330.00 a week indefinitely? Those programs are there for those who need temporary assistance, not to make a lifestyle of it.

blackprix

August 9th, 2011
10:03 am

Anyone who thinks Americans want to collect unemployment over having a job with benefits is absolutely nuts!!

People are not out of work by choice. Cutting unemployment benefits in the current economic climate is a farce. Hardworking Americans are suffering and idiot lawmakers are making idiotic decisions … this is not acceptable!!!!!

gm

August 9th, 2011
10:07 am

Let see you stupid hicks vote the same rep conservatives in office for the last 10 years and you expect change ha, ha,
Sonny, Deal and the rest of the good old boys in Georgia care less about bringing jobs, and improving Georgia way of life, hicks in south georgia hate the people in metro Atl because they are trying to live in the 21st Century with the rest of the world.
Oh I forgot, its Obama faults has been the Gov in Georgia the past decade””’

rojer

August 9th, 2011
10:16 am

$330 a week is a lot of money. You could pay a decent mortgage with that every month. Bottom line is that some of my contractors dont even make that every week and if they increase my unemployment taxes, then thats coming right out of those contractor payments.

Employer

August 9th, 2011
10:22 am

I’ll keep this in mind the next time I get ready to hire someone. If I really need an additional employee, I will just probably pay them less to make up for the difference.

Employer

August 9th, 2011
10:25 am

About 25 cents per hour in pay cut for each employee should do the trick.

tc

August 9th, 2011
10:36 am

My husband has been doing auto body work for 35 years and after “cash for clunkers” there was no more work for his only skill. He was laid off in 2009 and went from $75k per year to $15k per year on UI. Do you honestly think we have been living on a high horse since then? Body shops are shutting down every day because the average americans are taking their insurance money after a wreck and paying their mortgage instead of fixing their cars. There are no body shop positions in our area and after 2 years his UI is exhausted and he still can’t find work. I make just enough to cover our mortage and we depended on that little bit of UI to buy my kids groceries and pay our power bill. This is the first year my children have had to start school without any new school clothes or even shoes. He paid taxes for 35yrs of his life and I’m currently paying. Please don’t call us parasites or lazy. He want nothing more than to find a job. If you want to contribute, fixe that car when someone rear ends you instead of sticking the $$ in your pocket.

N-GA

August 9th, 2011
10:46 am

For those of you over 50 looking for work, good luck. Age discrimination is alive and well. Employers don’t want to pay older workers for their experience. They also don’t want to open themselves up to higher health insurance rate.

Difficult if not impossible to prove, though.

STOP

August 9th, 2011
10:49 am

Stop blaming the government.

Get off your couch and go find a job. They are plenty of jobs out there

Employer

August 9th, 2011
10:53 am

$75K for body shop work? Are you kidding me? Maybe he was working on Lamborghini’s? Teachers don’t make that kind of money and they have college degrees, and a lot more responsibility for society as a whole, for crying out loud. Who, in the right mind, would pay someone $75K to fix and paint car fenders? Many doctors don’t make that and think about how much it cost them to go to school vs how much it costs at the trade school to learn body shop work. No wonder it costs so freaking much to have a car fixed after a wreck. If he was making that much doing that type of work, good for you; you hit the lottery! I don’t consider y’all parasites; this economy sucks right now due to the complete ineptitude of our fearless community organizer. Your husband will find work again, I’m sure. But don’t be looking for that $75K again any time soon.

STOP

August 9th, 2011
10:54 am

Destin Dog: Yes, they should be required to do community service for their check. They need to earn it instead of sitting all day at home blaming the government for their problems.

Clemm

August 9th, 2011
11:02 am

“Who, in the right mind, would pay someone $75K to fix and paint car fenders? Many doctors don’t make that…”

I seriously doubt many, if any, medical doctors make less than $75K/year.

Hugo

August 9th, 2011
11:07 am

@STOP

And then you and your employer can pay even more taxes to set up and monitor the community service program. Brilliant idea.

namealreadyused

August 9th, 2011
11:14 am

To Bagger and friends: I have been working and paying taxes since 1962 with a perfect attendance record. I am not a parasite and have never been lazy. I was let go due to current business conditions beyond my control. I am not living high on the $260 per week. I sure hope STOP and Bagger and EX DOL Worker and Buzz G are secure in their jobs because it can happen to anyone these days. Oh, and Bagger, as far as the cake, I would like chocolate. Yum!

Debby

August 9th, 2011
11:17 am

Employer: I think it is highly possible for a skilled auto body person to make $75,000/ As a matter of fact, many skilled in a trade (plumber, electrician, HVAC etc.) can make very good money. It’s a bit snobbish to think that only those with degrees can make decent money. Maybe it’s time for people to think twice about that college degree and go learn a trade that’s needed.

Truth

August 9th, 2011
11:19 am

This is why you have to take care of yourself. You must save 15% of your gross income beginning with your first job after HS or college. This means you must delay satisfaction. No smart phones, cable tv, internet, new cars, large house with large property tax & utility bill, no credit card debt.

Rose

August 9th, 2011
11:21 am

@destin dawg: “unemployed should be required to do community service/work to get benefits..” That sounds like chain gang mentality. That’s what they do with prisoners. In what world, that you live in, is it a crime to be unemployed? It’s a horrible situation, you cannot live on unemployment, most people do not want to live on unemployment benefits but that’s what they’re for. So “destin” when was the last time you were unemployed?? How’d it feel?? If the “work to get benefits” would end up in a job that would be incentive. Otherwise, counterproductive to FINDING a job.

John

August 9th, 2011
11:22 am

Enter your comments here

destin dawg

August 9th, 2011
11:23 am

plenty of jobs out there.. food service… casual dining.. not just fast food… medical.. nursing.. nursing homes.. elderly care… think outside the box.. home cleaning… baby sitting.. hell you can make $1000 cutting grass.. if you can fix irragation systems.. $1500/week… get a job… don’t just send out resumes.. you may not be qualified or over qualified…

Truth

August 9th, 2011
11:24 am

Tell your children to work for themselves but if they do they must make a lot of money or it’s not worth it plus everyone will want your wealth.

Or tell them to work for the Federal government, hard to get fired, cheap insurance and full retirement (They still have Pensions).

This is the truth.

destin dawg

August 9th, 2011
11:27 am

Rose.. I’m retired because I worked hard.. saved and invested.. was let go at 57 .. in company austerity.. if you’re unemployed what are you doing on here ??

tc

August 9th, 2011
11:36 am

Employer, yes he averaged $75k a year but worked MANY hours a week to get there. He would love to have just 1/2 of that now. As with a mechanic, if you’re good at it, you can make the $$ but if you’re slow and not accurate as most, the average is on $50k. When you see that fresh out of school kid working on your car, it takes him 60 hours to do a 50 hour job but my husband can do the same 60 hour job in 30. It’s call comission based on skill pay.