Aiming to stabilize business costs for the next few years and provide rate relief to employers with good employee retention records, the Senate passed an unemployment insurance reform bill last Thursday that got mixed reviews from business leaders.
Cape and Islands Senator Dan Wolf, part-owner of Cape Air, said the bill is revenue-neutral, will provide four years of rate stability, and better distinguishes between “who uses the system and who doesn’t” when determining the level of taxes paid by businesses to pay for jobless benefits.
“This bill will provide financial predictability, reward positive employment histories with lower costs and foster a healthy economy that supports the business community,” Senate President Therese Murray said in a statement. “These reforms strike a careful balance between providing businesses with a helping hand without taking that same hand away from the unemployed.”
Senate Minority Leader Bruce Tarr and his small caucus were outvoted along party lines in their efforts to scale back the state’s 30-week benefit period, the longest of any state, and attempts to tighten up benefit eligibility, which the Retailers Association of Massachusetts said is the easiest in the country.
“There’s some underlying changes that need to be made that weren’t made with regard to eligibility standards, benefits, and they’re — I admit — very hard to make, but they do put Massachusetts out of the mainstream,” said National Federation of Independent Business State Director Bill Vernon, after the 33-4 vote. “The good part obviously is the rate-structure has been changed.”
Mr. Vernon said under the Senate bill, which lowers rates for businesses with steady employment records and increases them for businesses that lay people off, companies in the construction and landscaping business that go through regular layoffs will see their costs go up.
“We’re rewarding our good companies. That’s a good thing,” said Mr. Vernon, who said the reforms would not offset the additional costs businesses would experience with an increase in the minimum wage. The Senate voted to raise the wage from the $8 per hour rate today to $11 per hour in 2016.
The House this year plans to pass a minimum wage increase in conjunction with unemployment insurance reforms, according to plans outlined by House Speaker Robert DeLeo.
Mr. Tarr said the size of unemployment benefits is nearly double that of every other state, though he said the Republicans would not seek to reduce that, attempting instead to increase eligibility requirements and provide new economic triggers that would reduce the 30-week timespan when benefits can be paid out. Every state besides Massachusetts and Montana, which provides benefits for 28 weeks, allows the unemployed to collect for 26 weeks, and Mr. Tarr argued the federal government would step in once 26 weeks of state benefits expire.
The mechanics of the bill freeze unemployment rates this year — avoiding a costly bill for business due at the end of the first quarter — and set out a schedule for rates in the next three years, while increasing the taxable wage base from $14,000 to $21,000.
“Small businesses see that as a permanent tax increase. The rates go up and down,” said Mr. Vernon. He said many of the reforms sought are difficult politically, and said he believes an adjustment in eligibility and a reduction in the number of weeks the benefit is paid could be possible in the House.
Senator Wolf said the maximum weekly benefit is $679, and said the dollars paid out in unemployment benefits go right back into the economy. The new rates will mean the most stable employers pay $153 per employee per year, while the companies with the most layoffs pay $2,337 per employee per year.