23 States are now borrowing from the U.S. Government to pay for unemployment benefits. (California has borrowed $4.5 billion as of mid October 2009, the most in the nation.)
This is only the beginning of the bad news for states and employers. States will be borrowing more and taxing employers more in 2010. This will impact the willingness of companies to hire in the future. This is not good news for the job market.
For example, Florida, which has borrowed $465 million as of mid October, this past week increased its unemployment insurance tax on employers for next year quite substantially. The minimum tax will jump from $8.40 per employee to $100.30 – analmost 12-fold increase – while the maximum will go up from $378 peremployee to $459. Florida is facing a multitude of issues as it tries to dig itself out of the faltering economy. The Sun-Sentinel did a great piece this week highlighting how Florida is losing residents, jobs and borrowing $300 million per month to make unemployment payments. See Shrinking Florida faces tough choices as residents flee, jobs vanish
Arizona is among 33 states that will increase unemployment compensationtaxes next year, according the National Association of State WorkforceAgencies. See State tax push makes U.S. firms wary of adding jobs
Arizona recently asked to borrow $600 million in federal funds to keep its jobless payments going. With its October 2009 unemployment rate of 9.3% Arizona will be needing to raise taxes on employers as well. It is currently estimated that Arizona will increase its tax 41.8% on employers in January 2010. See Arizona jobless funds running out
Most states will announce their unemployment tax rates for 2010 before year end and taxes will be increasing. This is bad news for employers and the outlook for jobs. The Heritage Foundation’s Foundry blog recently posted a good explanation on how these increases will further hurt the job market. See How Unemployment Taxes and Obama’s Stimulus Are Killing Jobs
The List of States Borrowing To Pay Unemployment Benefits follows. We added Arizona to the BLS list that was compiled as of October 19, 2009.
|3||New York||$1.6 billion|
|5||North Carolina||$1.3 billion|
|8||New Jersey||$700 million|
|13||South Carolina||$570 million|
|17||South Dakota||$308 million|
|20||Rhode Island||$104 million|
Source:Bureau of Labor Statistics