Unemployment Insurance and Workers’ Compensation Rates for 2013

Today the Employment Security Department (ESD) announced that unemployment insurance rates will either stay the same or be reduced for most employers in Washington for 2013.

In 2013, 14 percent of employers will move into lower rate classes, 61 percent won’t change, and 25 percent will move into higher rate classes. More than one-third of all employers will be in the lowest rate class because they had no layoffs in the past four years.

Thanks to a permanent tax cut approved by the state legislature and the governor in 2011, unemployment tax rates in each of the statfe’s 40 rate classes will remain unchanged from 2012, ranging from 0.14 percent to 5.82 percent.

Employment Security Commissioner Paul Trause noted that most employers in this state have been spared the large rate hikes that are occurring in other states in the wake of the recession because Washington entered the recession with a healthy benefits trust fund.

According to an ESD fact sheet,

After plunging by 18.5 percent in 2012, the average tax rate will rise from 2.02 percent in 2012 to an estimated 2.19 percent in 2013. . . .

Unemployment tax collections will grow from about $1.3 billion in 2012 to $1.4 billion in 2013 – largely due to business growth as the economy recovers. Even so, Employment Security will collect about $58 million less unemployment tax than if the 2011 tax cut hadn’t passed.

Additionally, in a previous blog post, I wrote about how the federal emergency unemployment compensation program is set to expire at the end of the year. Last week, ESD said that up to 60,000 Washingtonians would lose those benefits.

On workers’ compensation, the Department of Labor and Industries (L&I) recently announced that for the second year in a row, workers’ compensation premiums will not increase overall. (Some employers’ rates may go up or down, though.)

Earlier this year, when L&I proposed no increase for 2013, Director Judy Schurke credited the proposal to savings from the reforms passed during the 2011 legislative session and other factors projected to hold down costs next year.

The 2011 reforms will save $1.5 billion over four years, $300 million higher than originally estimated. . . .

L&I’s rate decision means an additional $82 million will be placed in the State Fund reserves by the end of 2013.

For more on unemployment insurance, workers’ compensation and other labor costs, please see this policy brief from October.