EVERETT, MASS., APRIL 5, 2017…..Without recommending a solution, the state’s top labor official on Monday cautioned that a recession would quickly jeopardize the solvency of the state’s unemployment insurance fund and highlighted benefits that he said are the highest in the nation.
Official state forecasts do not foresee the state’s unemployment insurance trust fund dipping below $600 million over the next five years and two rates hikes are scheduled for employers, but Labor and Workforce Development Secretary Ron Walker devoted a portion of his testimony before legislative budget writers Monday to the level of benefits paid to the unemployed in Massachusetts.
“While rates are frozen and claims volume is low, the Massachusetts maximum benefit rate continues to rise and currently sits at a national high of $722 per week with a highest-in-the-nation 30-week maximum benefit,” Walker told the House and Senate Ways and Means committees at a budget hearing in Everett. “This gap between rates and benefits will continue to grow during this rate freeze, exacerbating the viability issues we would face should a recession hit.”
According to a Walker aide, he raised the issue to stress the necessity of keeping a large reserve in the fund.
A spokesman for the state’s largest business group told the News Service that he and others are “puzzled” about why the fund is projected to pay out $1.3 billion in benefits this year while the unemployment rate is at 3.4 percent.
Geehern said the fund’s solvency is “an issue that we’re certainly looking at,” and agreed the fund would “run out of money pretty quickly” in an economic downturn.
On Jan. 1, the unemployment insurance rates paid by businesses are scheduled to be adjusted from Schedule C to Schedule E levels. According to the administration the average annual per-employee cost will increase to $617 in 2018, up from $508 in 2017.
“We don’t think that a two-level jump is warranted or good for the economy at all,” Geehern said.
As the Baker administration seeks to tamp down surging costs at MassHealth, administration officials have floated a proposal to pursue a federal waiver that would make employees offered insurance through their employer ineligible for the state’s Medicaid program, the News Service previously reported.
The proposal aired to business leaders would also at least temporarily increase the Employer Medical Assistance Contribution that businesses with six or more employees pay as part of their unemployment insurance costs, and it would include a multiyear freeze in unemployment insurance rates.
Copyright 2017 State House News Service