We’ve closed the first quarter of 2016 with a few notable events in the world of unemployment.
The State of Connecticut recently retired its Title XII loan debt to the Federal Government. This is certainly good news to Connecticut employers as they have been subject to the highest Federal Unemployment Tax Act (FUTA) rates in the country. With the presence of this debt, coupled with Connecticut repeatedly choosing to not seek a waiver to the Benefit Cost Ratio (BCR) add-on rate, the 2015 FUTA expense for Connecticut employers was 2.7% (up to $189 per employee). Now that this debt has been repaid, Connecticut employers can look forward in 2016 to paying the standard .6% rate (up to $42 per employee), the annual FUTA expense employers are subject to in most states.
In addition, the state of Minnesota has enacted legislation that would give $285 million in tax cuts to employers. This is possible as a result of the current level of funding in the state’s unemployment trust fund. This will apply to employer taxes payable starting 7/1/16 through 6/30/17. In addition to offering tax cuts to employers, the state will also be offering increased UI benefits to claimants that file for unemployment due to layoffs in the mining industry. A bill has also been passed granting extended benefits to mining workers who have been laid off. These workers will have access to an additional 26 weeks of benefits. Extended benefits paid under this program would not be charged back to employer tax accounts, nor would they be used in the calculation of future employer tax rates. This will not apply to claimants who are participating in an approved work retraining program.
The national unemployment rate at the end of the quarter (Q1 2016) was 5.0%, which is a slight increase from February, but consistent with the rate at the end of 2015.