Unemployment insurance rates to rise
October 6, 2004
With labor and business representatives agreeing Nevada must rebuild the Unemployment Insurance Trust after two years of recession, the Employment Security Council voted Wednesday to support raising Nevada’s unemployment insurance rate.
Staff economist Patrick Morton laid out a series of charts for the council showing that the trust fund grows through periods of economic growth – but can be drawn down rapidly when recession hits. He said in Nevada and the nation, that tends to occur every nine to 10 years, and that the fund was drawn down significantly by the recent recession.
With the economy recovering and growth strong in Nevada, Morton said staff recommends raising the overall unemployment insurance rate from 1.29 percent of wages to 1.38 percent.
He said that rate would generate a total of $286.6 million for the trust fund in 2005 – enough to provide tax revenue to cover unemployment payments, allowing the body of the trust fund to grow and restore itself with interest.
Labor representative George Foster of Reno agreed with the recommendations.
“I think when times are good we should go ahead and build up the reserves,” he said.
Recommended Stories For You
Las Vegas labor representative Rick Wilkening joined Foster: “I agree with George. It’s time to start putting the nuts away for the winter.”
The vote was unanimous to recommend adoption of the new schedule. There will be a workshop to explain the new rates to small businesses Nov. 3 at the Public Utility Commission Building in Carson City. There will be a public hearing at the DETR headquarters in Carson City Nov. 16 before the rates are finally adopted.
The nearly 28,000 businesses in Nevada which pay unemployment insurance to the state are divided into 18 classes based on the rate their employees leave and file for unemployment insurance benefits each year. The most stable businesses with the least amount of turn-over pay only one-quarter of a percent of payroll into the unemployment trust fund. Those with the highest turn-over rates pay the federal maximum of 5.4 percent.
By far, most businesses in Nevada qualify for rates in the five best and cheapest classes on that schedule.
To raise the rates from 1.29 percent to 1.38 percent, the state simply raises the requirements to qualify for the best rates. So a business which was in the best rated class this year might slip to the second best rated class in 2005.
Overall, the new rate would reduce the number of businesses that qualify for the five best class rates by 3 percent and increase the number of businesses in the five worst classes by 5 percent.
Contact reporter Geoff Dornan at email@example.com or 687-8750.