Governor Deval Patrick today signed an Unemployment Insurance rate freeze that will limit the average UI tax increase for Massachusetts employers to $61 per employee and keep more than $400 million in the private sector.
The measure takes effect immediately and averts an average 40 percent jump in UI taxes that was set to hit employers next month after rates automatically increased from Schedule E to Schedule G. Schedule G would have increased overall UI contributions from Massachusetts employers from $1.576 billion to $2.235 billion.
Patrick signed the UI freeze two days after the bill received final approval from the Massachusetts Legislature. It marks the third consecutive year in which lawmakers have frozen UI rates and comes amid significant improvements to the financial strength of the trust fund that pays benefits to jobless workers.
"Without this legislation employers would have seen an average increase of $228 per employee,” Patrick said. “We want to encourage a positive climate for employers and by signing this bill we are helping to position the state for continued economic recovery.”
Massachusetts employers still face an average increase of 10 percent in UI taxes this year because of unfavorable experience ratings posted during the prolonged recession. They also face a 50 percent jump in assessments for the fund that provides medical insurance to unemployed people.
AIM has maintained for months that a UI rate increase would have been unnecessary and excessive. 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.
"I thank Governor Patrick and the Legislature for freezing scheduled unemployment insurance rates for 2011," said Richard C. Lord,President and CEO of Associated Industries of Massachusetts.
"This action heads off a scheduled 40 percent increase in UI taxes at a time when many businesses are continuing to struggle through a tough economy. This is the type of action AIM advocates for and will help lead to a strong economic climate in Massachusetts. We look forward to further meaningful discussions of related reforms."
Lord said those reforms should 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.
Legislative leaders said the freeze was critical to keeping the economic recovery on track.
“This effort will help give our businesses some additional breathing room as they work to overcome this challenging economic environment. We need to continue to foster environments where jobs can grow and be created, and this is another step in that direction,” said Senate President Therese Murray.
“As we struggle to survive in these challenging times, it’s important to ease the burden on businesses, which fund our unemployment system,” House Speaker Robert A. DeLeo said. “This rate freeze signals our commitment to stimulating business and creating jobs in the Commonwealth.”