The Boston Globe reports that Governor Deval Patrick froze unemployment insurance rates to spare businesses from big increases in premiums and help spur new hiring.
Employers’ payments finance the trust fund that pays unemployment benefits to the state’s jobless. The rates would have risen as much as 40 percent in March as Massachusetts takes steps to keep the fund solvent. Instead, the fund will take interest free loans from the federal government to make up shortfalls resulting from the freeze.
Patrick signed legislation approving a plan to defer the cost increases for business. In a press release, he said the move would save businesses $402 million this year, or an average of $228 per employee.This is the second year in a row Patrick has signed legislation enacting a freeze.
State’s typically exhaust unemployment trust funds during economic downturns, particulalry when they last long, as this one has. The money borrowed is repaid as the economy improves and the fund replenished as the fewer workers lose jobs and collect benefits.