Savings Will Help Businesses Work Through Tough Economy
TRENTON – Legislation sponsored by Senate Labor Committee Chairman Fred Madden to cut the unemployment insurance tax rates that will be imposed on employers during the upcoming fiscal year, which would help businesses in New Jersey work through the difficult economy and save or add jobs, was signed into law today.
“As New Jersey comes back from the recession with new jobs and consumer confidence, we have an obligation to do all that we can to help small businesses stay afloat,” said Senator Madden (D-Gloucester and Camden). “These savings will have a significant effect in reducing operational expenses, which in turn, will allow employers to retain and hire more workers. This legislation is a sound solution that will help employers and employees alike.”
The measure (S-2404/A-4112) will suspend the 10 percent unemployment surcharge scheduled to take effect for FY 2014, giving employers an estimated savings of $293 million. Similar actions for FY 2013 and FY 2012 produced savings as well. Senator Madden said the three-year total savings could be close to $1.5 billion. Without the changes proposed under the legislation, existing law imposes a mandatory 10 percent surcharge during FY 2014, because the Unemployment Insurance Trust Fund reserve ratio is currently less than 1%.
The cost deferrals were recommended by the Unemployment Insurance Task Force, of which Senator Madden is a member. Specifically, the measure will base the employer UI tax on the “E” column of the tax table but without the 10 percent surcharge provided in the law.
“At a time when employers face serious financial challenges, this tax break will help small businesses survive and grow,” said Senator Madden. “This is a commonsense measure that strikes an important balance between giving businesses a break, yet still providing full unemployment benefits for residents out of work.”
The legislation cleared the General Assembly last week with a vote of 73-0. The Senate unanimously approved the measure in February by a vote of 37-0. The law goes into effect immediately.