2008 vs 2017
State Tax Revenues: Increased $6.55 billion (20.5%)
Benefits Paid: Decreased $13.16 billion 30.6%
Trust Fund Balances: Increased $25.25 billion (84.2%)
2016 vs 2017
State Tax Revenues: Decreased $2.17 billion (-5.4%)
Benefits Paid: Decreased $1.78 billion (5.6%)
Trust Fund Balances: Increased $8.27 billion (17.6%)
State tax revenue, unemployment benefits paid and trust fund balances are often reflective of economic circumstances. For the 2008 to 2017 data points, the recovery from the Great Recession is represented. From 2008 to 2017, the state tax revenues increased considerably to make up for the increased benefit charges during the recession. The benefits paid has decreased from 2008 to 2017, which is not surprising as the economic recovery expanded from the lows experienced in 2008 – 2010.
We have created a chart based on The United States Department of Labor data from 1985 to 2017 comparing the ratio between overall benefits charges paid to unemployment taxes collected in the U.S. Throughout the years, the cost ratio has gone from a low of 0.37 to a high of 1.6. The difference in cost ratio can be attributed to increased benefits paid out during economic recessions and times with increased unemployment rates. To make up for the increase in benefits paid, experience-rated taxes are increased in the following years to replenish the trust funds. From 1985 – 2017, the yearly cost ratios have a combined average of 1.02, meaning that for every $1 that has been paid out in benefits to unemployed claimants, the states have collected back $1.02 in experience-rated taxes. This cost ratio is important because it shows that over time on a macro scale that it’s a good and sound rule of thumb that every $1 dollar saved or lost in unemployment benefit charges is a $1 dollar saved or lost in unemployment taxes.
Employers Edge is dedicated to winning the most unemployment claims possible for our customers, which reduces benefit charges and taxes paid by the maximum possible amount. If you have any questions about our services and how we save employers time and money, you can get in touch with us at (877) 235-3343 press 1 or www.employersedge.com.
Prepared by UWC – Strategic Services on Unemployment & Workers’ Compensation. Published by the National Foundation for Unemployment Compensation & Workers’ Compensation