More than 30 states have had to borrow billions from a federal fund to cover unemployment benefits and higher state unemployment tax bills are forcing employers around the nation to shell out more than $1 billion in interest payments this month, CNN reported on September 29, 2011. Companies in 24 states may have to start paying between $21 and $63 more per employee in federal unemployment taxes in January. Doug Holmes, president of the business trade association UWC Strategic Services on Unemployment & Workers’ Compensation, told CNN that employers paid 27.8 percent more in state jobless taxes last year. “Unemployment taxes, which were a relatively low bottom-line cost in 2008, are now becoming a significant cost,” Holmes said. “It discourages companies from electing to hire new employees.”
This is the first time during this economic downturn that states have had to pay interest on their federal borrowing, which CNN said currently totals nearly $38 billion. The 2009 stimulus act waived interest payments for two years, giving both cash-strapped states and their employers some breathing room.
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