Tax rates increased to meet demand
By Isaac Bonnell
Washington set a new record in 2010, but it’s not necessarily one to be proud of.
More than 500,000 Washington workers collected nearly $4.7 billion in unemployment benefits in 2010, surpassing records set in 2009, according to the Employment Security Department (ESD).
“This has been another demanding year for Employment Security, but even more challenging for those who still can’t find a job after months and months of looking,” ESD deputy commissioner Joel Sacks said in a news release.
By the numbers
2010: 500,000 people received $4.7 billion in unemployment benefits
2009: 475,000 people received $4 billion in benefits
2008: 290,000 people received $1.2 billion in benefits
Glancing at other labor statistics for the year doesn’t paint a pretty picture.
The average unemployed worker collected benefits for 41 weeks in 2010, up from an average of 28 weeks at the end of 2009. Also, the state hit a seasonally adjusted rate of 9.5 percentunemployment in March, the highest rate in nearly 30 years.
With so many people seeking unemployment benefits, the ESD is raising unemployment insurance rates for the second year in a row. The average tax rate in 2011 will be 3.26 percent, up from 2.39 percent in 2010.
The average rate is the highest since 1988. Unemployment tax rates are recalculated each year using a formula established by state law. The ESD does not have discretion to set or adjust tax rates.
Even employers that have had no layoffs in the past four years will see higher tax rates because benefits paid out far exceeded taxes collected in the past year. About $2 billion in benefits was paid out from the state’s unemployment trust fund in 2010 compared to about $1.2 billion in tax collections.
Unemployment taxes are deposited into a trust fund from which benefits are paid. As of Nov. 30, there was $2.5 billion in the fund, enough to provide about 15 months of benefits in a severe recession.
Employers paying taxes in January 2011 are filing for the last three months of 2010, so they should continue to use their 2010 tax rates. The new tax rates will be used to calculate taxes that are due April 30 for the first quarter of 2011.