Unemployment insurance premiums going up

Colorado employers that laid off workers during the recession are facing steep hikes in their first-quarter unemployment-insurance taxes.

But about half of Colorado employers — those who didn't engage in layoffs — are seeing rates stay flat or even decline, according to the Colorado Department of Labor and Employment.

The average rate or premium that employers will pay on the first $10,000 of wages has risen from 1.77 percent in 2009 to 2.48 percent percent for 2010, the department estimates. Next year and beyond, however, employers across the board can expect heftier rates to replenish an insolvent state-unemployment insurance trust fund.

http://www.denverpost.com/ci_14903257

So companies doing poorly enough that they had to lay people off are now going to see higher unemployment insurance premiums, this sounds like a sure fire way to ensure that many of those companies will cease to exist.

Comments

[Brian Martinez]

To play devil's advocate, I wonder if this would even be a story if the unemployment insurance was privately administered. After all, if you get into an accident or make several collision claims, you can pretty much count on your auto insurance rates going up. Similarly it makes sense that companies who lay off a lot of people (thus making them eligible for unemployment benefits) can expect to pay more for insuring its workforce.

The problem of course is that employers do not have a choice about paying for unemployment insurance.

[severin]

I think you are right Brian, but I expect that in a free market there would be unemployment insurance, but it would mostly be purchased by employees and not employers and the insurance companies would punish and reward people with higher/lower premiums based on their work history and not the companies they work for. I have several friends who I have never known them to keep a job for more than a year, but they get paid unemployment for a year everytime they get "laid off".

[wmc]

The probelm is that they are granting everyone unemployment. An employee stealing got unemployment, a disgruntled employmee trying to stage a walk out got unemployment, an employee that left to move to California and go back to school got unemployment. As an employer, suddenly and mysteriously, about 75% of my claims aren't in on time and I automatically lose. Then I have to appeal to get the rights back to fight the employee. What happens when an emploer just gives up. This is time consuming. All employers will be paying in premiums. They won't have any other way to make up the huge deficit they are facing.

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