Unemployment calculation bill would reform CT’s compensation system

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My name is David Bohn and I am a resident of Redding. I was born in Connecticut and have lived here most of my life. I am the president of Preferred Utilities Manufacturing Corporation which has been based out of Danbury since 1946 and currently employs almost 90 people.

I am a Connecticut employer who has kept his family business here despite the oppressive and stifling atmosphere including overwhelming taxes and regulations. I have been outraged at Connecticut’s Federal Unemployment Tax Act tax on all employers because of the state government’s inability to responsibly manage our federal loan, and the illegality of a tax on businesses who do not vote or have a say in government.

I now see a wonderful opportunity for the state to correct its course by reforming Connecticut’s unemployment compensation system like the states surrounding us have done. The HB 5367 bill that was unanimously approved by the Connecticut Legislature Labor Committee would reduce the amount of tax businesses in Connecticut have to pay, and have no impact on the state budget.

The FUTA tax, unemployment tax hikes and similar policies drive businesses that provide substantial funds to the government out of the state. Most recently and notably, GE Capital moved its headquarters just over the border to Massachusetts because of better tax policies than Connecticut. Employers in Connecticut have been paying the highest federal unemployment taxes (FUTA tax) in the nation—$189 per employee this year, versus $42 in most other states — for a while. This is a significant and difficult expense for companies like Preferred Utilities, where we currently employ about 90 people.

The necessity for the unemployment reforms outlined in HB 5367 seems absolutely clear. As unemployment taxes become higher and higher, we at Preferred Utilities have to reevaluate the profitability of staying in a state that cultivates such an adverse climate. All other states surrounding Connecticut, except Rhode Island, charge a lower tax in state unemployment.

How do they do it and we cannot?

There are a number of steps the General Assembly can take to adjust unemployment benefits in Connecticut.

  • Raise the minimum earnings to qualify for unemployment benefits to $2,000. Connecticut only requires applicants to earn $600 annually to qualify for benefits. This is the third lowest requirement in the country. In comparison, 32 states require applicants to earn between $2,000 and $5,000 annually.
  • Require applicants to post their resumes online to receive benefits after six consecutive weeks of unemployment. This allows the state to track the progress of someone searching for work. In Rhode Island, this reform proved to get the unemployed back to work faster.
  • Base benefits on an employee’s annual salary rather than two highest quarters, to avoid inequitably rewarding seasonal workers. Sixteen states base employees’ benefits on a full year’s salary.
  • Freeze the maximum weekly benefit rate for three years. The maximum benefit rate is allowed to increase by $18 every year. Freezing this for three years could save as much as $10 million per year.

Source: Connecticut Business and Industry Association.

Other states have instituted reforms that have improved the unemployment process and conditions in their states. Connecticut must follow their lead. The Connecticut General Assembly and the governor have a chance to restore the state’s Unemployment Compensation Trust Fund, begin climbing out of the billion-dollar federal debt, and give Connecticut employers a much needed financial break by applying the reforms in the HB 5367 bill while still providing for the unemployed in the state.

David Bohn is President and CEO of Preferred Utilities Manufacturing Corporation in Danbury.

 

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