Small businesses want fair shake when state repays unemployment loans

By South Carolina Radio Network

November 12, 2009

State officials have been meeting with Employment Security Commission officials in recent months to discuss how to rebuild the state’s Unemployment Trust Fund and repay funds borrowed from the federal governernment’s pool of unemployment loans. By the end of this year, the state of South Carolina will owe the federal government $750 million. One recommendation would repay $1 billion in loans, beginning the first of 2011. According to federal law, the state must pay the interest on the loan, which will amount to $350 million. At that rate, it will take the state until 2019 to pay off just the borrowed money.

South Carolina Small Business Chamber of Commerce President Frank Knapp wants to make sure that, as state lawmakers decide beginning in January on the final plan of how to repay the federal government for the unemployment loans, that small businesses don’t get cheated.

“Small businesses have been subsidising payouts to the unemployment trusfund going to larger businesses,” says Knapp.  “Whatever is done to solve this crisis, we don’t think that small businesses should be penalized for the excessives and abuse of larger organizations.”

Knapp says small businsses don’t mind paying their fair share.  He agrees that the system probably needs to be restructured.

One point brought brought out in recent meetings was a practice by many companies, as allowed by current employment laws, to have the Employment Security Commission pick up the tab for workers who are only being laid off temporarily, for a matter of weeks.

The state has also depleted it Unemployment Trust Fund. To approach the level of $1.1 billion in trust fund savings recommended by the federal government, in a period of 2.5 to 3 years, one recommendation increases the employee wage base from $7000 up to the national median of $14,000, and putting a surcharge on unemployment compensation paid by all employers. The wage base is the amount of a worker’s salary which a state government uses to compute unemployment tax. A state government must use at least $7000 and that’s what South Carolina uses.


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