Unemployment insurance reforms started in 2013 have resulted in additional savings for New York state employers in terms of their contributions, according to Gov. Andrew Cuomo.
Employers have already saved an estimated $200 million through the early repayment of federal debt with each saving, on average, an estimated total of $1,200 or $84 per employee, according to Cuomo. As a result, the unemployment insurance contribution rate schedules have been adjusted downward, further reducing costs and saving employers up to an additional $42.80 per employee.
Additionally, the state Unemployment Insurance Trust Fund, which pays out benefits to claimants and is funded by employer contributions, ended the year with a positive balance for the first time in six years.
“Our commitment to reducing the cost of doing business in New York is paying dividends in growing our economy,” said Cuomo. “The unemployment insurance reforms we put in place in 2013, coupled with record jobs growth and controlled government spending have resulted in year-over-year savings to businesses. Now, New York businesses can reinvest these savings into their operations and employees, further strengthening our economy.” Unemployment Insurance contribution rates paid by employers are determined by their individual experience in the system and by the level of reserves in the Unemployment Insurance Trust Fund. Over the past five years, employers paid higher contribution rates because the Unemployment Insurance Trust Fund’s deficit and the Great Recession’s high unemployment rates, state officials said.
Now that reforms have made the fund more sustainable, employers whose use of the system has been consistent in recent years will be assigned a lower rate.
Reform also led to the implementation of new fraud detection and prevention measures to help combat unemployment insurance fraud. Officials said this helps to protect the integrity of the trust fund and ensure that employers are not charged for a former employee’s claim when that employee is responsible for the loss of employment.
New York State Acting Labor Commissioner Roberta Reardon said, “We will continue to work with businesses across New York state to ensure that the reforms laid out in Gov. Cuomo’s 2013 reform agenda are met. The Department of Labor thinks of business as a customer, and we want to keep our customers happy by ensuring their needs are met and New York’s record jobs growth continues.”
In March 2013, Cuomo signed reforms into law, which increased benefits for workers, decreased costs to employers, and modernized the unemployment insurance system by making it sustainable and self-correcting. The law included a mechanism to pay back the federal loan three years ahead of schedule, resulting in today’s lower costs. In addition, the risk of borrowing from the federal government is now lower and payments for employers will be more predictable than under the old system of yearly surcharges.
Cuomo said the improved economic conditions of the past several years also contributed to paying off the Federal Unemployment Insurance Trust Fund loan early. When he came into office in 2011, the state unemployment rate was 8.3 percent. Today, the state’s unemployment rate is at 4.8 percent–its lowest level since November 2007–and the unemployment rate is down by more than 3 percentage points in each of the 10 regions of the state since December 2010.
New York’s economy has added 770,000 private sector jobs and experienced employment growth in 52 of the past 60 months.