And in your present, too, as Virginia businesses are paying higher unemployment taxes for each worker on the payroll:
In an update to the state Commission on Unemployment Compensation on Friday, Employment Commissioner John Broadway said unemployment rates are improving, but employers will see their average unemployment tax peak next year at $229 per employee.
That’s up from $99 per employee in 2008. The tax is intended to replenish the fund from which unemployment benefits are paid, so the lower that fund gets, the higher the tax. And even though unemployment rates have improved, it will take several more years to refill the fund.
That’s a hefty increase in anyone’s book. At the margins, it might be enough to curtail hiring.
The state, too, has taken a hit as it’s had to borrow (and has mostly repaid) hundreds of millions of dollars in loans to the (bankrupt) federal government to cover unemployment benefits.
The only way to lower the tax is to replenish the unemployment fund. And the best way to do that is through economic growth…which means policies that encourage growth rather than stymie it.
The President has promised that he will unveil (yet another) plan to get the economy moving after he’s finished with his vacation. The early indications are that he will call for extending the payroll tax cut and call for more federal spending. It’s a political calculation more than a plan. And if it happens to bear an uncanny resemblance to certain elements of the nearly-trillion dollar stimulus plan that was supposed to keep the national unemployment rate below eight percent, you would be right.
Far more than whatever plan the President presents are the looming super committee negotiations on additional savings in the federal budget. if that committee fails, automatic cuts will occur. As half of those cuts would be in defense spending, Virginia’s defense-dependent economy could be kneecapped — thus making those higher unemployment insurance taxes on state businesses even worse.
Just one more reason for Virginians to keep a very close eye on the super committee’s work. If that group of worthies can’t reach an agreement, the commonwealth’s public and private sectors will pay dearly for it.
