The Massachusetts Senate took a major step to accelerate the economic recovery today by approving legislation to freeze Unemployment Insurance rates and head off a 40 percent average UI tax increase.
The measure now moves to the House of Representatives, where Speaker Robert DeLeo yesterday expressed the need “to ease the burden on businesses.” Governor Deval Patrick also supports the freeze, setting the stage for resolution of the unemployment insurance crisis well before first-quarter UI bills go out to employers next month.
The Senate approved the freeze by a nearly unanimous vote. Lawmakers said that a large and sudden increase in UI rates would cripple the fragile economic recovery and is not needed to maintain the solvency of the fund used to pay benefits to jobless workers.
A UI rate freeze would still leave Massachusetts employers paying approximately 10 percent more in unemployment taxes in 2011 than they did last year because of weakened experience ratings. But the jump is far less than the $260 per-employee increase that employers would suffer if the automatic move in UI rates to Schedule G that took effect on January 1 were allowed to stand.
Employers will pay an average increase of $65 per worker under the freeze measure.
“Employers commend the members of the Senate who voted to approve this measure, which will help put Massachusetts residents back to work,” said Richard C. Lord, President and Chief Executive Officer of AIM.
“We particularly appreciate the leadership of Senate President Therese Murray; Ways and Means Chair Stephen Brewer and Vice Chair Steven Baddour; Labor and Workforce Development Chair Dan Wolf; and Minority Leader Bruce Tarr – all of whom worked with AIM to resolve this important issue.”
A rate increase is unnecessary and excessive now that the financial position of the UI Trust Fund is improving after two years of heavy demand caused by more than 8 percent unemployment. A significant decrease in the number of claims for unemployment prompted state officials in December to revise their estimate of the Trust Fund balance from a negative $302 million to a positive $12.7 million.
"Many of us ran on programs last year of jobs, jobs, jobs. This is a very important action we can take to set the tone for this commonwealth. Paul Tsongas once said you cannot love the employee and hate the employer," Brewer told his colleagues during the Senate debate.
Governor Patrick, who recently expressed reservations about a freeze, expressed support for the Senate bill in a statement Wednesday night.
“The Patrick-Murray administration supports the rate freeze, and believes that additional reforms are necessary in the future,” said Alex Goldstein, press secretary to the governor.
AIM looks forward to working with the governor and state lawmakers to accomplish those additional reforms. Employers seek structural changes to the UI system that include reducing the maximum duration of benefits to 26 weeks and increasing from 15 to 20 weeks the period that employees must work to qualify for benefits.