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Higher unemployment taxes, a rising jobless rate and increasing costs are problems that are often thought about by states and employers. In Pennsylvania, a recent change to unemployment insurance benefits resulted in significant cost savings for the state, while impacting who is eligible for payments.

According to the Pittsburgh Post-Gazette, Pennsylvania was in a tough spot only a couple of years ago, thanks to a $4 billion debt to the federal government after borrowing money to supplement the state’s unemployment insurance trust fund. In order to return to the black, government officials decided to borrow more money at a lower interest rate and alter the state’s eligibility rules. As a result of this decision, Pennsylvania saved $214 million last year alone.

The Pittsburgh Post-Gazette reported that old unemployment rules allowed workers to earn up to 63 percent of their annual income and remain eligible for benefits. The recent shift in legislation changed that to only 50.5 percent, removing a fair chunk of the population from consideration. That alteration accounted for $136 million of the $214 million total savings noted in 2013. State officials predicted that the move would affect 49,000 people, but the final tally was closer to 41,000.

Not every industry supported the change, however. Construction companies were vocal detractors, according to the media outlet, but the biggest impact was instead felt in the professional and business services sector.

State unemployment rate ticks down
In addition to the trend of immense savings for Pennsylvania, state employers and workers also received more good news: a declining unemployment rate.

According to the Pennsylvania Department of Labor and Industry, the local jobless rate dropped to 5.7 percent in April. In March, it was 6 percent, and it was 7.6 percent during the same time last year. Better yet, the amount of unemployed residents decreased as well, down 22,000 on a monthly basis to its lowest level experienced since the fall of 2008. Employment, on the other hand, increased 23,000 month-over-month.

Furthermore, the professional and business services sector gained the most jobs in April, followed by construction. Overall, total nonfarm jobs in the state increased 34,400 for the month, with private industries leading the charge.

At Corporate Cost Control, we work closely with employers across the country to better manage the nuances of unemployment insurance. Legislation changes on the state level could impact you today, and we welcome any questions or concerns you may have on a wide range of topics.


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