By Mark Johnson, Senior Vice President of Government Affairs
I’m very happy to report that Washington State’s unemployment insurance system is on solid ground and one of the best in the county.
That’s the news that came out of last week’s Employment Security Advisory Council meeting that I attended as a council member.
The UI program is funded entirely by employers. That’s unlike the injured workers’program or the new paid family and medical leave program that both are funded by employers and employees.
As the economy continues to thrive, the unemployment rate remains at historic low percentages. This in turn means employers’ tax rates for UI continue to drop. The agency is estimating a .85 percent tax rate by 2020 – the lowest it has ever been. For comparison, in 1986 the rate hit a record 4.03 percent.
Even after the Great Recession, Washington State has one of the healthiest reserves in the country. The reserve is $4.8 billion, which equates to 16.6 months of benefits even if the state stopped taking in taxes. Other states were not as prepared or fortunate when the recession hit. Many UI systems ran out of money and had to borrow from the federal government. Several states are still paying back the borrowed money. To catch up, many states had to increase their tax rates significantly.
While we know someday the economy will slow and businesses will be forced to lay-off workers and even close their doors, I am heartened to know that Washington State is much better prepared to meet this challenge than most other states. It is refreshing to see a state agency doing well and providing a very important service to our employers and their employees in an efficient and cost-effective manner.