Connecticut Employers Will Pay Extra For Unemployment

The Hartford Courant's Janice Podsada and I wrote about extra fees that Connecticut employers will have to pay to fund unemployment benefits. Here is a link. Here is the first few paragraphs of the article:

This summer Connecticut will start charging employers an extra fee to help pay back hundreds of millions of dollars the state borrowed from the federal government to fund unemployment checks to the jobless.

The fee works out to about $400 for an average business with 10 workers, or $40 per employee, said Carl Guzzardi, unemployment tax director for the state Department of Labor.

But the fee is just one of several increases employers are facing. By next year, a typical company will see its unemployment insurance payments increase by hundreds of dollars per worker compared with 2008. Costs vary depending on each firm's layoff history.

The added costs are particularly galling to businesses that have fought to keep all their workers on board.

"We've never had a layoff -- even when times are tough. Now, we're paying for someone else's decision or bad behavior," said Guy T. Hatch, chief executive of On Site Gas Systems Inc. inNewington, which makes equipment that generates nitrogen and oxygen at high purity levels.

Connecticut is one of 30 states that continue to borrow from the federal unemployment account to pay for state unemployment programs. Those states owed a total $42.25 billion as of Jan. 21, and the debt keeps getting deeper, according to the U.S. Department of Labor.

With the unemployment level hovering at 9 percent for months in Connecticut, Guzzardi said the state expects to borrow $1 billion from the federal government in the next few years.

The added charge covers just the interest on Connecticut's federal unemployment loans. In January, state employers' share of federal unemployment taxes will also increase, to recoup the $581 million Connecticut has borrowed since the state's unemployment insurance trust fund bottomed out in October 2009.