By Don C. Brunell, President, Association of Washington Business
The hardest thing an employer has to do is to call someone into the office and tell them the business isn’t making enough money to keep them on. Handing a hard worker a pink slip is tough because often the boss knows the employees and their families —their kids go to school together or they attend the same church. It is a terrible choice, but one that must be made to save the business — and the jobs of other employees.
The anguish of having to lay someone off can haunt an employer. On the other end, the hardest thing a worker endures is coming home and telling their spouse and children they lost their job.
Our family has been on both ends of this scenario.
My father was a master electrician, one of the best. But when home construction was down or a large construction project ended, he got a pink slip. For him, making that dreaded trip to the unemployment office was almost worse than getting a pink slip.
My family also owned the garbage collection business in our small town. When my brother and I were in grade school, we had to go door-to-door each month collecting a dollar for our weekly service. When there was a miners’ strike or massive layoff in the copper mines, our customers scraped for money.
Knowing that some of our friends in school had trouble even finding a nickel a week for milk money, it was hard to ask their parents for a dollar to pay for trash collection. But without that money, we couldn’t afford gas for our garbage truck.
Fast forward to 2011. Businesses and hard-working people have endured some of the most difficult times since the Great Depression. While the economy is finally showing signs of recovery, jobs remain scarce.
That has created a Catch-22 situation in our state. Washington employers pay unemployment taxes based on how many people they lay off over the course of a year. The recession has forced so many layoffs; though, many employers have had triple-digit hikes in their unemployment insurance (UI) taxes, and some have seen their UI taxes jump by over a thousand percent.
Ironically, a benefit intended to help jobless people is making it harder for them to get jobs.
UI isn’t the only cost employers are struggling with. Washington is a high-cost state to do business. Our tax system is based on the volume of business, not profitability, as in Oregon. Unemployment benefits and corresponding taxes on Washington employers are among the nation’s highest — in the top five. And workers’ comp costs are more expensive than most states.
Add them together and Washington employers face costs that often lead to reduced work hours, layoffs and delays in hiring.
This year, employers are asking the Legislature for relief. They’re requesting a temporary reduction in UI premiums until the economy improves. After recovery, the employers will repay that money into the state’s UI trust fund to insure our state can pay unemployment benefits without borrowing from the federal government.
Union leaders want a trade-off for temporary rate relief — higher unemployment benefits. While we all would like to help unemployed families, adding $15 per week to unemployment benefits for each child adds millions in costs and will further raise UI rates. The end result will be the same: fewer jobs.
When high UI costs stifle an employer’s ability to create jobs, no one wins. After all, a paycheck always beats an unemployment check.
About the Author
Don Brunell is the president of the Association of Washington Business. Formed in 1904, the Association of Washington Business is Washington’s oldest and largest statewide business association, and includes more than 7,100 members representing 650,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.