Reduction in contributions will save employers over $40 per employee
Unemployment Insurance Trust Fund Ends 2015 Solvent for the First Time in Six Years
Governor Andrew M. Cuomo today announced that the Unemployment Insurance reforms he championed in 2013 have resulted in additional savings for New York State employers in terms of their State Unemployment Insurance contributions. 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. 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 New York 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 Governor 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 New York State 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, New York State employers paid higher contribution rates because the Unemployment Insurance Trust Fund's deficit and the Great Recession’s high unemployment rates. Now that Governor Cuomo's reforms have made the Trust Fund more sustainable, employers whose use of the system has been consistent in recent years will be assigned a lower rate.
The Governor's Unemployment Insurance Reform has also led to the implementation of new fraud detection and prevention measures to help combat Unemployment Insurance fraud. 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 Governor 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, Governor Cuomo signed major 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.
The improved economic conditions of the past several years also contributed to paying off the Federal Unemployment Insurance Trust Fund loan early. When Governor Cuomo came into office in 2011, the New York 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. In December 2015, the number of private sector jobs in the State stood at more than 7.8 million, an all-time high.
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