Rise in Unemployment Tax Could Hurt Florida Employment

Cape Coral, FLThe high unemployment rate will hit Florida businesses even harder when an increased business tax rate soon makes employers responsible for paying an increasing number of unemployment insurance claims. Workers fear that higher taxes on employers could cause hiring freezes and drive the Florida unemployment rate even higher.

Under Florida law, an automatic tax increase is triggered when the balance in the state's Unemployment Compensation Trust Fund falls below a prescribed threshold. The increase will see the minimum unemployment tax rise twelve-fold in 2010 to $100.30 per employee, up from $8.40 per employee at the current rate. The maximum rate will rise from $378 per employee to $459.

Florida is among the states that charge a higher rate of unemployment tax according to the number of employees a company has laid off and thus, drawing dollars from the benefits pool.

Many employers have argued that the higher tax rates will force them to hire less—if at all—and make do with fewer people.

The unemployment problem appears to be improving gradually (the national jobless rate dropped from 10.2 per cent to 10 percent in November), but there is no question that it is still a huge concern. The Associated Press reports that states are swamped with unemployment benefit recipients.

Businesses are struggling with soaring costs and other economic factors: tight credit, rising health care costs, wary consumers and a higher minimum wage.

The News-Press told the story of Betty Andrews, the president and CEO of Certified Glass Inc. in Cape Coral, Florida, who will see her unemployment taxes rise to about $650 for her six full-time workers. Andrews said that the tax increase in the unemployment tax budget is just one more cost she has to shoulder, including the nearly $10,000 per year she pays in workers' compensation insurance, a cost she acknowledges is particularly high because of the risks associated with the glass and glazing industry.

Still, with a no-injury record at Certified Glass, Andrews considers the high fee a frustration in itself.

States need to ensure they have enough in their coffers to see them through hard times, but making businesses shoulder the costs may only serve to exacerbate the Florida employment problem.