Small businesses will be hit hard

BOISE -- The Idaho Department of Labor says the severe economic downturn has put an unprecedented number of Idahoans out of work and filing for unemployment benefits. That big increase is driving the need to increase tax rates employers pay for unemployment insurance by 70 percent in 2009.

Director Roger Madsen announced the rate increase on Wednesday.

“The benefits provided idled workers from this fund are critical to the communities they live in and to the economy overall,” Madsen said. “These weekly checks are helping over 15,000 workers and their families pay their bills and support the businesses in their communities. And this keeps these skilled workers in Idaho so businesses will have the labor pool they need once this economy begins growing again.”

In conjunction with the increase in employer tax rates, the maximum weekly benefit for workers will decline about 3 percent.

Officials say these changes are necessary to keep the Unemployment Insurance Trust Fund solvent. The fund balance has declined from nearly $320 million in November 2007 to under $240 million at the end of September.

Benefit payments in recent weeks are double the amounts paid a year ago and well ahead of the record pace of 2003, when over $181 million in unemployment benefits were paid.

Another 8,400 workers, who have exhausted their state unemployment benefits, are receiving additional benefits under the federally financed extended benefits program.

Madsen will sign the executive order setting the 2009 rates this week. All 50,000 Idaho employers will be notified of their exact rate in a letter to be sent Dec. 19.

“I deeply regret having to send this rate notice, but I am mandated by law to do so,” Madsen said.  “I have worked for the past 25 years to lower what were the nation’s highest tax rates in 1984 to our lowest rates in history. Unfortunately, the slow economy triggers this automatic tax increase.”

Idaho’s unemployment rate has doubled in the past year, the largest percentage increase in the unemployment rate of any state. More than 40,000 workers were without jobs in October, the highest number in over a quarter century. In the past year, the unemployment rate has risen in every county, city and labor market area in the state. 

An employer paying the average annual wage in Idaho will see his tax liability per worker getting that wage rise from $296 to $518.

At the same time the maximum weekly benefit for workers will drop from 59 percent of the average weekly wage – $364 in 2008 – to 57 percent of the average weekly wage – $362 percent. Had the reduction not occurred, the average weekly benefit would have risen to $376.

The higher rates in 2009 will generate less than $50 million in additional revenue to the fund.