It’s that time of year again when employers are bracing for the onslaught of unemployment tax rates for the coming year.  Several states have already mailed their tax rates, but they are effective from July 1 through June 30 each year rather than the more typical January 1 through December 31.  The states of New Hampshire, New Jersey, Tennessee, and Vermont are the states that use the “off-cycle” period and have all mailed their tax rates to employers.

Oklahoma recently mailed its rates, and Wisconsin is due to mail theirs any day.  In all instances, the tax rate tables remained the same as in 2019 because the unemployment fund balances are healthy and solvent.  The taxable wage base remained the same in all states except Oklahoma, where it increased from $18,100 to $18,700.

It is likely that many of the states will maintain the same tax rate tables and taxable wage bases for 2020 based on information released at the National Association of State Workforce Agencies (NASWA) Workforce Summit, which took place in September 2019.  Since the economy continues its healthy progression, state unemployment trust fund balances also remain healthy.   Looking towards the future, however, the outlook is not quite so optimistic.  Economists continue to paint a picture of a recession looming. However, there is no crystal ball that can precisely predict when it will occur.  History suggests a recession will occur to some degree every seven to 10 years, and we are well past that point since our last recession.

The more prevalent message delivered at the summit was encouraging and multi-pronged.  State unemployment agencies are working collaboratively to provide data analytics across the country.  Data sharing is helpful in reducing and identifying fraudulent claim activity.  Several agencies provided specifics on how they share data to assist with more efficient handling of the processes necessary to administer their programs.  For example, certain data points are collected in the unemployment agency that are similar if not identical to those collected for human service programs.  By sharing data, the time frame for administering the process from start to finish is often reduced.  It also assists in identifying fraudulent activity.

State workforce systems are being upgraded to maximize efficiencies and keep personally identifiable information secure.  The efficiencies gained are enabling the agencies to focus on better customer service and training of their staff.  One agency demonstrated how it uses data and analytics to help with the workflow to its agents by importing data into spreadsheets that display an overview in a dashboard functionality.  As with any system modernization projects, some remain on-budget and finish on time while others do not.  One speaker noted that ten years ago, about 20% of the time, projects such as this were on-time and in-budget, but now, it’s closer to 35% of the time, so progress is being made in that realm as well.

At the end of the conference, two economists presented their points of view on the economy today as well as the concern of U.S. workers about the reduction of jobs and increased growth in earnings inequality.  With regard to the latter, statistics prove out this fear.  From 1980 to present, individuals with a secondary degree saw their earnings doubled while earnings of those with a high school diploma dropped by 20%.  In 1940, 92% of the population earned more than their parents at the same age.  In 1980, that number dropped to 55% because of the greater inequality of distribution.

He went on to say that demand for employment in high skill and low skill jobs continues to rise, but employment in mid-skill, such as production work or office/clerical work, has declined.  Couple this with the increase in artificial intelligence or AI, and you may find cause for greater concern in certain skill areas.  The good news in all of this is there is evidence to demonstrate room for human beings to work alongside AI technology.  It is just a matter of individuals determining where their skills lie in relation to careers that are up and coming in the AI/human world combined workplace.

Overall, the NASWA summit was incredibly informative and quite optimistic.  We will continue to follow economists and state agency updates to keep our clients informed of the changing economic climate.


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