Smart Business Magazine, January 2018

DON BOYD FROM THE OHIO CHAMBER OF COMMERCE The time to act is now Fixing Ohios broken unemployment compensation system DON BOYD Director of Labor Legal Affairs Ohio Chamber of Commerce Ohios largest and most diverse statewide business advocacy group has been a consistent voice for business since 1893 As the states leading business advocate and resource the Ohio Chamber aggressively champions free enterprise economic competitiveness and growth for the benefits of all Ohioans 614 629 0916 dboyd@ ohiochamber com www ohiochamber com H owever the Great Recession 22 Smart Business Cincinnati Northern Kentucky Winter 2018 highlighted how large a problem this can be In fact at the beginning of 2009 Ohio had enough in the unemployment trust fund coffers to pay just one weeks worth of benefits Thus the state was required to borrow over 3 billion dollars from the federal government in order to pay benefits This led to significant increases in federal unemployment taxes to repay the loan from the feds At its highest employers were paying more than 100 extra per employee per year to repay the loan Temporary pain relief To fix the short term issue the outstanding federal debt and escalating taxes the legislature passed a bill last year to pay off the debt with the state being repaid using a surcharge on employers state unemployment taxes This action provided Ohio employers with a one time savings of approximately 350 million While this eased the financial pain for employers the structural problems and likelihood that the state would be in the exact same situation during a future economic downturn remained Simply put it was the equivalent of giving an individual with a broken arm an aspirin It provided temporary pain relief but the underlying structural problems causing the pain still exist Little progress since Since that time there have been a joint committee additional legislation and even a stopgap measure introduced at the end of last year to allow for further discussions This grew into joint discussions between legislative business and labor leaders this year in an attempt to craft a solution that would make sense and be agreeable to all parties Unfortunately while those discussions were beneficial an agreement could not be reached Any solution to fix Ohios broken unemployment compensation system needs to be balanced and must address both what is paid into the fund and what is paid out in benefits Essentially the key is looking at both sides of the equation revenue and spending to truly fix the system This remains a significant issue for Ohios employers because fixing the system even if it means slightly higher state unemployment taxes will provide both stability and predictability for Ohios employers Failure fix this problem will leave employers in the same situation the next time there is an economic downturn with the state borrowing from the federal government for benefits and employers facing ever escalating taxes Rather than kicking the can down the road for another day the time to act is now Ohios unemployment compensation system is broken It has been structurally insolvent for years taking in little more than it is paying out even in the best of times linkedin com company ohio chamber of commerce facebook com OhioChamber @ OhioChamber