I’ve seen a lot of whacky policies in my time, but unemployment insurance (UI) is one of the worst. It forces businesses to pay “contributions” into the state “employment security fund.” The fund will replace part of the lost incomes of workers who lose their jobs and have difficulty finding new work.
Sure, the intentions are noble, but let’s highlight the whacky. Employers are forced in a way to pay for incomes for workers who aren’t working, and the workers who need jobs still get paid something for doing nothing — as if this will incentivize them to return to work. It doesn’t take a genius to see the money paid into the fund by businesses could have and would have been better used for workers and salaries. If workers need insurance of any kind, fairness and efficiency would leave it to them to decide for themselves instead of government forcing their employers to bear a higher cost for each employee.
Running a business is tough enough. But it’s even more difficult when government imposes taxes, regulations, and other speed bumps along the way. Imagine doing your best as an Idaho business leader to weather the storm of the COVID years and the unprecedented policies our governor planted on you (lockdowns, closings, distancing, etc.), and now the Biden inflation, only to be pounded again.
Recently, an Idaho Freedom Foundation supporter, who is also a hard-working and successful businessman, wrote to the IFF with a disturbing story about his unemployment insurance obligations and what the state is demanding of him. After three years of business turmoil, the state wants to increase his “contribution” amounts by .5%. It may not sound like much, but it amounts to nearly $22,000 for the business, on top of all his other obligations.
This employer is one of the good guys. During the pandemic, he did his best to keep his doors open, keep his employees working and paid on time, and get back to full-time work as soon as possible. He was doing the right things.
Apparently, the argument goes like this: because overall incomes are increasing (though lagging behind Biden inflation), the state unemployment fund requires increasing “contributions” (read: “taxes”) from employers to meet obligations for laid-off workers who qualify for unemployment payments. This seems even more confusing when coupled with the fact that Idaho is experiencing an acute labor shortage with a very low unemployment rate (although labor force participation is very low too) so workers should have no trouble finding work.
The unemployment insurance payouts should be at an all time low right now. Just who is getting paid for unemployment in such a job-rich environment? According to the Legislative Services Office, there is approximately $1.18 billion in Idaho’s Employment Security Fund. That’s $220 million in reserve and $998 million in the trust; huge amounts considering the low unemployment and the limited number of weeks for payouts to those out of work.
The governor, understanding very little about real economics, insists the rate increase will not be forever. He promises to reduce the rate in the future to help businesses, but will no doubt sell it as a great conservative policy of his to reduce the increase in the unemployment insurance premiums of Idaho businesses. Read that again, reducing the increase in premiums is our governor’s idea of being “conservative.”
That’s how our governor operates. Increase spending and programs, overextend our budgets, then provide a modicum of relief, and finally claim to be God’s gift to conservatism. Idahoans are wising up though. After years of massive budget increases (spending up our taxpayer-funded surpluses), and passing comparatively anemic tax cuts, Idahoans are feeling the pinch. We need real tax relief and fewer obstacles to businesses that are the engines of growth and prosperity in Idaho. It’s an uphill battle.
Finally, let’s end on one bright spot. Instead of increasing taxes on employers to meet a “crisis,” at least one legislator, Rep. Bruce Skaug, has a plan to reduce the weeks of unemployment benefits promised to workers. By lowering the maximum weeks of recipiency from 20 weeks down to 14 weeks, it will be possible to keep the employment security fund solvent without raising taxes on businesses. It’s a small win, but is even more powerful when compared to then-President Obama increasing the maximum weeks of benefits to 99 (nearly TWO years) back in 2010 as part of the American Recovery and Reinvestment Act.
The Idaho Freedom Foundation applauds Rep. Skaug, providing at least one alternative to the governor’s liberal tax and spend and regulate machine. We need more of this, Idaho businesses need more of this.
Ronald M. Nate, senior policy fellow at the Idaho Freedom Foundation, is an economics professor at BYU-Idaho, holds a Ph.D. in economics from the University of Connecticut, and is a former state representative for Idaho Legislative District 34.
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