Employer cost for unemployment tax

[mdd7000]

This is a huge increase and won't help in getting the economy back on track.

[url][/url]http://www.honoluluadvertiser.com/article/20090919/NEWS01/909190336/Hawaii+businesses+rocked+by+skyrocketing+unemployment+tax

This is the first couple of paragraphs from the article in the Honolulu Advertiser:

Hawaii businesses rocked by skyrocketing unemployment tax

By Christie Wilson
Advertiser Staff Writer

Dramatically higher unemployment insurance taxes set to go into effect in April could mean employers will have less money to hire new workers or give out raises, according to several business leaders.

The state said this week it will raise the tax employers pay from an average of $90 per employee per year to $1,040. The increase was triggered by a severe decline in the state's unemployment insurance trust fund, which pays out benefits to workers who have lost their jobs.

With Hawai'i's unemployment rate at 7.2 percent and lower unemployment insurance tax payments in 2008 and 2009, the Department of Labor and Industrial Relations projects the trust fund will be depleted by the end of 2010 from an all-time high balance of $552 million in 2007.

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[whalesong]

Employee's at HPM have been given a 5% pay cut to compensate for this coming employer expense. So, the employees are already being affected by this law.
I feel, it will also, create more layoff's and close more business's, sadly.

[mikewj]

So HPM now will make a profit on UE Tax? If the company is currently paying $90.00 per year per employee, then if you calculate employee salary at only $10.00 per hour X 40 hrs per week X 52 weeks, total salary pa would be $20,800. 5% of this amount is $1,040, which is exactly the amount of the proposed annual increase. BUT, the company is already paying $90.00 pa, so they get to save that amount per employee on their $10.00 per hour help. Any employee being paid more than ten dollars would be kicking back 5% of their excess to the company. If these numbers are true, HPM stands to show a profit on the backs of it's workers. For example a $20.00 per hour employee would be withheld $2,080.00 per year. Profit to HPM would be $1,130.00 per year. ($1040.00 + $90.00) Nice little bonus! Far from closing businesses, a 5% reduction in salary would actually increase the company's bottom line. If these numbers are true, and the 5% reduction by HPM is also true, then were I employed by HPM I would propose that the 5% should be withheld until the withholding is equal to $1,040.00 minus the $90.00 already being paid. That way HPM's net remains the same, and the workers suffer less of a penalty. Just a thought.