Michigan employers will get unemployment insurance relief in 2020 after the state settles debts from the Great Recession
Michigan employers will see their annual unemployment insurance contributions drop by $ 65 to $ 217 per employee after the state annuity bonds were issued in 2012 to pay off unemployment claims debt during the Great Recession.
The state unemployment insurance agency announced Friday that the Michigan Finance Authority’s $ 3.2 billion in bonds had been released.
“This is good news for Michigan companies, their hardworking employees and our economy at large,” said Governor Gretchen Whitmer in a statement. “It will give employers more opportunities to grow their businesses and give back to their communities.”
Corporate groups had campaigned for the state to issue bonds to stabilize the rising unemployment rate that skyrocketed in the years following the Great Recession in 2007-09.
“Long-term funding was absolutely the right solution to addressing the crisis-level financial bankruptcy in the Michigan unemployment insurance program,” said Delaney McKinley, senior director of government affairs and membership for the Michigan Manufacturers Association, in a statement. “Investing in this solution saved hundreds of millions in annual federal tax penalties, resulting in long-term savings for employers who fund the UI system. Make no mistake, the Obligation Assessment has significantly increased the cost of unemployment for Michigan employers.”
The high cost of unemployment insurance due to recession debt debt has long been viewed as a deterrent to doing business in Michigan.
“By retiring these bonds, employers will be relieved of the obligation per employee they have been paying since 2012,” said Wendy Block, vice president of business lawyers for the Michigan Chamber of Commerce, in a statement.
Michigan employers have paid an obligation rating based on their unemployment insurance tax rate, which is higher for companies with frequent or previous mass layoffs.
The unemployment insurance agency released a chart on Friday that allows employers to see their annual savings based on UI tax rates that range from 0.06 percent to 10.3 percent.