NYS Lawmakers Must Act to Fix Unemployment Insurance Fiasco – UI Assessment Charges Costing NYS Employers Billions
I received a shocking bill last month in my mailbox from New York State. It was the notice from the Unemployment Insurance Fund, saying my account was underpaid by $905. This wasn’t an error or mistake on my part, but rather a blunder from New York State. It is the quarterly assessment charge on 12% of my contributions to the UI fund. It is forced upon me to make up for New York’s lack of responsibility to repay its debt and mismanagement of the program.
In turn, the Department of Labor’s inaction is costing my small business nearly $4,000 a year. This is a huge amount of money for my brewery and restaurant at a time when I’m still recovering from the pandemic, dealing with labor shortages, and facing significant inflation costs, like all businesses and farms with employees across the state.
New York is one of five states that has an outstanding balance after it borrowed from the federal government to pay out unemployment insurance claims during the height of COVID. What is worse, New York is the only state that hasn’t begun to make any payments on its debt. Instead, it is turning to businesses, large and small, to make up the difference. Saddling us with assessment charges to make up ground to the tune of $8 billion.
On top of this, New York State Comptroller Thomas DiNapoli released a scathing report two weeks ago blasting the New York State Department of Labor for having an antiquated Unemployment Insurance System that made it ripe for fraud. The comptroller estimates it cost New York taxpayers approximately $11 billion in the 2020-2021 fiscal year. A number he says is likely low since the COVID temporary program has a higher risk of bogus claims. A crackdown on fraud would have more than made up for the $8 billion being passed down to employers as an assessment charge.
We are now on the verge of a recession. We are hearing of large companies beginning to layoff large numbers of employees, which will only put the UI program and our state in an even more unstable position.
All along I was told that my UI rates would not increase, that the difference would be government funded. Turns out it isn’t true. The system is broken. If there isn’t a fix soon, there will be more consequences.
For starters, my business has plans to limit our hours and turn to more private events to reduce our labor force and control spending. We have already seen farms making significant changes to grow less labor-intensive crops and incorporate more technology because of rising labor costs. This could only exacerbate those changes. Other small businesses may decide it isn’t worth it and will choose to close their doors as the UI bills increase along with everything else.
I am asking New York State lawmakers to work together to find a solution, take responsibility for the lack of action, and pay the debt. Doing nothing sets a dangerous precedent, that New York State will essentially pass along a “UI tax” every time it can’t pay its bills. New Yorkers cannot afford that.
Palladino is the owner of Heritage Hill Brewery in Pompey, NY and represents District 5 on the New York Farm Bureau State Board.
