WASHINGTON, D.C., November 20, 2003 – Based upon a survey recently conducted by TALX Corporation, employers expect significantly higher unemployment payroll taxes in 2004.
A majority of the respondents (59.5%) indicated that they were “extremely concerned” about how states will respond to their depleted unemployment insurance trust funds. Fully 25% of the respondents indicated that they have budgeted for 20% or higher unemployment tax increases, with another 11% of the surveyed employers budgeting for increases of 11% or higher. Only a handful, 1.2%, indicated their companies were not concerned. More information on the survey results is available at www.ucexpress.com/survey/.
“Employers face a tough situation next year,” said Eric Oxfeld, President, UWC – Strategic Services on Unemployment & Workers Compensation. “We have already encountered significant increases in 2003, but 2004 will be worse. Employers, who finance the unemployment insurance system, have already been forced to cut payrolls because of the severe impact of the recession, and now they will have to shoulder the additional tax burden to replenish depleted state unemployment trust funds. It will take years before the problem will go away.”
Based upon another survey conducted by TALX, this one addressing state unemployment agencies and tax outlooks for 2004, “those concerns appear well warranted,” Oxfeld said. “As of November 17, 2003, 31 states have announced unemployment tax hikes for 2004. Of those states, the increases in Arkansas, California, Colorado, Florida, Georgia, Pennsylvania, Minnesota, Illinois, Ohio, and Oklahoma are especially significant, because employers will be paying unemployment taxes 20% higher than the taxes paid in 2003. Illinois and California are also considering proposed legislation that could result in still higher unemployment taxes.”
Currently, six states' unemployment trust funds have run out of funds (Illinois, Minnesota, Missouri, New York, North Carolina and Texas) and have received federal loans to continue paying unemployment benefits. California and Massachusetts are expected to borrow in early 2004. California alone will be $1.1 billion “in the hole.”
TALX Corporation, a leading business process outsourcer of payroll and human resource services serving two-thirds of the Fortune 500 and other employers, surveyed more than 150 tax professionals at large US employers, 62% of which have more than 3,500 employees. The survey was conducted in September and October and drew 168 responses. Respondents were asked about their expectations for unemployment taxes in 2004. For more information about TALX Corporation, call 314-214-7000 or access the company's Web site at www.talx.com
UWC – Strategic Services on Unemployment & Workers' Compensation (UWC) is the only association exclusively devoted to advocacy for business on national workers' compensation and unemployment insurance public policy. UWC also manages the National Foundation for Unemployment Compensation and Workers' Compensation, which conducts educational activities and research to help individuals from industry, government, associations and other professions, gain a keen understanding of the nation's unemployment insurance and workers' compensation laws. More information on UWC and the National Foundation is available online at www.UWCstrategy.org.