Why You Pay More

July 8, 2011

Each year at the end of July or in early August,

 

the State of New Jersey

 

mails to all NJ employers

 

the updated Employer
Contribution Reports
.

 

 

This report notifies
employers of their new unemployment rate

 

For the next 12 months

 

 

This begins a yearly ritual.

 

The owner sends a copy to their accountant,

 

the account reviews it

 

and life goes on.

 

 

Unemployment is a necessary evil.

 

 

Did you know….

 

 

Unemployment is the 2nd highest employer mandated tax paid by a business?

 

 

It is the only tax that you have the opportunity to control
what you contribute?

 

 

 

Unemployment is similar to having a checking account with
the State.

 

 

With this report….

 

 

The State tells you how much is in your account (reserve
balance)

 

 

The State also show you how many dollars were paid out in
claims

 

(how much was taken
out of your checking account)

 

 

The State assigns a rate based on the reserves you are
carrying

 

As a percentage of the taxable wages you have paid over the
past 3 to 5 years

 

 

 

This rate determines how much you will contribute into the
unemployment fund

 

over the next 12 months.

 

 

 

Seems pretty simple….

 

 

 

You hear all the latest political buzz

 

 

 

Everyone is talking about the deficit….

 

 

What are we to do about the debt ceiling?

 

 

 

Reduce our cost…….

 

 

Don’t raise taxes……

 

 

 

My guess is that nobody wants to talk about

 

 

The unemployment
deficit!!!!!

 

 

 

Each month we get updated numbers on the job market

 

 

Unemployment is over 9%

 

 

How are we to support the growing number in unemployment?

 

 

 

Did anybody tell you

 

That you will be getting a tax increase

 

 

To help cover the shortfall?

 

 

 

 

In the NJ Unemployment Rate Table

 

There are 6 columns the State uses to determine employers’
rates

 

 

 

In 2009/2010.

 

NJ worked off column
B
to establish employer rates

 

 

Because of the rise in unemployment claims

 

The reserves became depleted

 

 

 

In order to build up the reserves in 2010/2011,

 

There was talk in NJ of working off column D.

 

 

The State chose to buffer the increase passed onto employers

 

and work off column C instead

 

 

 

That meant

 

last year every employer in NJ saw their rates go up
automatically

 

And pay more into the unemployment fund.

 

 

 

Did the shift from column  B to C help?

 

 

 

The state still has a shortfall

 

 

 

This year,

 

There is talk of using column
E

 

for 2011/2012

 

 

However, most feel again

 

this would be too much of an increase

 

 

 

Instead,

 

 

 

Governor Christie’s signed a bill last Friday (7/1/11)

 

to work from Column D

 

 

 

I must have missed
that phone call!!!!!

 

Wasn’t that the Friday
before the holiday weekend?

 

I think I was stuck in
a traffic jam…

 

 

 

Each year,

 

the state continues to increase taxes by

 

 

shifting the table
used to assign rates to each employer.

 

 

We are all supposed to sit back and accept this as

 

 

The cost of doing business???

 

 

 

Besides jumping around on the table charts

 

 

 

How does an employer
even know their rates are correct?

 

 

Well, the State sent
me this form and it said this is our new rate

 

 

 

 

 

If you are an employer

 

with over 100 employees,

 

 

you should be asking that question.

 

 

The new rate does
not affect just 1 employee

 

But all employees

 

Therefore businesses with a larger employee base

 

Are affected more

 

 

 

If you currently employ over 100 employees,

 

Take the time to question your new rate

 

when you receive your notice.

 

 

 

Did you know that NJ has close to a 10% error rate in the processing of claims?

 

Nationally the error rate is over 11%

 

 

If the State is paying too much out in claims…..

 

 

Are they taking too
much money out of your checking account?

 

 

 

Really, close to a 10%
error rate

 

Who is holding the
state accountable?

 

 

 

For the last 10 years

 

Hutchinson Business Solutions along with our strategic
partner DCR

 

Has been asking this question for our clients.

 

 

We are your public
advocate.

 

 

There have been multiple instances that we have found an
error

 

In the rate assigned by the State

 

 

This is just not a NJ issue,

 

We see this in all the states we currently service
unemployment

 

 

 

How do you know if your current unemployment rate is
correct?

 

 

We would like to validate your

 

 

New unemployment rate,
for no cost.

 

 

We currently service many of the major corporations in the
Tri State area

 

 

For over 20 years

 

 

HBS and DCR have been at the forefront of unemployment

 

Representing the clients interest

 

 

Now more than ever, employers need to be proactive

 

 

Take the time to contest claims

 

 

Verify that the amount paid out for claims are correct

 

 

As the cost of unemployment continues to rise

 

You must be diligent

 

And take the necessary steps to manage your reserves

 

 

 

 

There may be some instances you cannot control

 

 

The state switches columns and everyone is affected

 

 

However,

 

There are multiple rates within each column

 

 

 

That is something we can
manage
.

 

 

Our goal is to keep the dollars in your account

 

And achieve the best rate possible for our clients

 

 

 

Notice that the state will always contact you

 

If you owe taxes

 

 

Unfortunately,

 

They do not contact you,

 

 

If you are overpaying
taxes

 

 

The onus is on you

 

 

 

 

Let us help you

 

All you need to do is ask.

 

 

Let us validate your unemployment rate?

 

 

Many clients have been surprised at what we have found.

 

 

 

 

To learn more about how unemployment rates affect your
business, email

 

george@hbsadvantage.com
or call 856-857-1230

 

Visit us on the web www.hutchinsonbusinesssolutions.com

Did You Know:

 

  • Unemployment is the 2nd  highest employer mandated tax
  • Each claim should be looked at as a potential $12,000 liability
  • Your Unemployment account is similar to having an open checkbook with the State:
    • The State assigns your rates
    • The State has total control of all monies in the account
    • The State determines the amount of each payment and disburses payments from this account
    • The State sends a quarterly reconciliation of all activity in the account
    • Would you handle your personal account this way?

 

Did You Know:

 

  • State of New Jersey has  a 12% error rate in the payment of unemployment claims.

 

The states are overpaying the amount of the claims and taking money from your account.

 

How we can help:

Our unemployment claim service will lower your rate because

  • We will audit every claim
    • Is the claim your responsibility?
    • Is the proposed dollar amount to be paid correct?
    • Are you 100% responsible for the claim being paid?
    • Is your account being charged for subsequent activities?

 

  • We will become the address of record and promptly notify you and file all necessary claim forms for your company.

 

  • We will review your existing claim procedure and make updates as needed to coordinate the handling of claim information between our offices.

 

  • We will hold seminars with key individuals and train your employees

 

  • We will reconcile your account to make sure the state has properly recorded all the payments and payroll information  that has been forwarded to their office.

 

  • We will verify your rate annually and determine if a voluntary contribution is applicable.

Should you want to know more about unemployment you may email george@hbsadvantage.com.

Visit our website www.hutchinsonbusinesssolutions.com  to learn more about opportunities to create savings for your comany.

Failing the unemployed

April 24, 2008

The U.S. unemployment insurance system, the primary safety net for workers in times of economic recession, is in need of significant repair. The current system, a state-by-state patchwork of policies and provisions, is rife with shortcomings and inequities. Perhaps the most important of these involves the difficulty many workers face in even qualifying for benefits. Unfortunately, those who are eligible to receive benefits sometimes find that the maximum benefit amount does not keep a family from falling into poverty. To make matters worse, unemployed workers and their families certainly aren’t helped by the fact that benefits often run out long before firms begin to re-hire workers. Of course, states could protect workers by extending the benefit duration, but many states have not adopted the provisions necessary to weather an economic downturn like the one the economy is now experiencing.

 

Structural problems with unemployment insurance


Workers are losing both coming and going – many are denied benefits while others see their benefits run out long before the job market rebounds. There are even problems for those who actually qualify for benefits. Most middle-class earners, who receive their state’s maximum unemployment insurance benefit, will struggle to eke out a poverty-level existence from UI. For many this means dipping into savings, using money earmarked for retirement, or increasing debt. For those without any of these resources, welfare may be their only recourse. Recent research indicates that nearly one-third of U.S. families will be unable to replace even 10% of their lost earnings from their savings during a spell of unemployment. For many of these families UI benefits represent the difference between stifling debt and financial security.

 

Grading unemployment insurance programs state by state


The deficiencies in the state unemployment insurance system result from its highly decentralized structure. The current arrangement allows states to act autonomously in setting eligibility rules, benefit levels and extensions, adequate financing, and taxes. To truly understand the deficiencies of the system, a state-by-state analysis is required. We have chosen critical qualities of the unemployment insurance system – eligibility, benefits, employer taxes, funding adequacy, and recession preparedness – and evaluated them according to each state’s policies.

 

Eligibility


The unemployment insurance program is a federal-state partnership, with eligibility for benefits determined at the state level. To qualify for benefits, unemployed workers must meet monetary and non-monetary requirements that vary by state. In simplified terms, the criteria that workers must satisfy are:

 

  • sufficient wages in the past year,
  • involuntary separation from employment, and
  • availability for work.

 

 

Although the principles embodied in these criteria are fair and appropriate, too often these tests result in the denial of benefits to two groups of unemployed workers: part-time workers and workers who have only recently joined the labor force.

 

Earnings requirements.

 

Eligibility can hinge on a state’s minimum earnings requirements in either the base period or the quarter with the highest earnings from the one-year base period. Base period wage requirements for minimum benefits range from $565 to $3,400, and high quarter wage requirements range from $150 to $2,266,5 though not all states have both base period and high quarter requirements.

 

In addition to requiring varying levels of earnings, states also set requirements about when those earnings must occur. In most states, the base period for determining UI eligibility and benefit levels is the first four of the five most recently completed quarters. Under this system, wages earned in both the current calendar quarter (the quarter in which the layoff occurred) and the previous calendar quarter are ignored in determining whether the worker earned enough to qualify for benefits. For example, someone laid off in late December 2007 and who began work in late February 2008 would not qualify for benefits in most states. Ten months of substantial wages does not immediately qualify a recent entrant to the labor force for unemployment insurance benefits in a state that uses the typical base period. Some states use a so-called “alternate base period” that incorporates the most recently completed quarter’s wages.

 

Non-monetary requirements.

 

In addition to varying earnings requirements, all states require that workers have lost their jobs involuntarily and through no fault of their own. States also require that workers be actively engaged in job search activities and that they be available for work. But states vary in their definitions of involuntary job separation and availability for work. For example, some states would deny a working mother UI benefits if she lost her job because the unavailability of child care prevented her from being able to change her work schedule from first shift to third. Some states also require workers to be available for full-time work, even if the job they lost was part time.

 

Benefit adequacy


Although eligibility is the single most important component of the unemployment insurance system, benefit levels are a close second. Paying adequate benefits can mean the difference between moderate hardship and privation. Benefits serve a dual purpose in the unemployment insurance system. First, they provide families the income assistance they need during a period of job loss. Without these benefits poverty rates among the jobless would be considerably higher. Secondly, the money put into the economy by the unemployment insurance system acts as a significant economic stimulus. Estimates indicate that, in the absence of UI benefits, recessions (as measured by a real decline in gross domestic product) would have been 15% deeper.

 

While the importance of UI benefits is clear, benefit adequacy, especially for those with low earnings, is ambiguous. Over time, little has changed in the way state systems calculate benefits, while much has changed within the U.S. labor market, especially in terms of U.S. poverty policy. This change in policy, initiated by Congress in 1996, requires the poor to work in the paid labor market. Since many of these workers may no longer be able to rely on welfare in times of economic distress, it is incumbent on the unemployment insurance system to cover the holes in the safety net.

 

Yet replacing nearly half of a poor worker’s lost income is very different than replacing half of a middle-income worker’s earnings. For those hovering on the brink of poverty while working, replacing half of their lost income means certain poverty. With more welfare recipients and low-income workers filing for benefits, a minimum benefit that replaces two-thirds of their lost wages makes more sense. Making benefit payments progressive in this way will help these workers pay for adequate food, clothing, and shelter.

 

The above is an excerpt I found that provided a good overview of the current unemployment program. Although written in 2002 by Economic Policy Institute, it is still pertinent today.

 

Let us know your thoughts?

 

You can email george@hbsadvantage.com

 

 

During the last few weeks I have noticed there is a lot of attention being paid to unemployment. Many people have logged onto our blog to find out information regarding unemployment.

 

Below you will find information about:

  • What is unemployment?
  • How do you become eligible?
  • How do they calculate the amount paid?
  • How does it effect employers account?

 

 

 

Per NJSSI

 

The unemployment rate measures the number of people actively looking for jobs as a share of those considered to be in the labor market. Unemployment affects individual well-being, and the rate of unemployment tells us about the health of the state’s economy. High unemployment means financial hardship for individuals and families. They, in turn, are less able to buy goods and services, which detracts from the strength of the economy.

 

New Jersey Eligibility

 

To be eligible for unemployment benefits, you must have worked at least 20 base weeks in covered employment or you must have earned $7,200. For weeks worked in 2006, the amount needed to establish a base week is $123; for weeks worked in 2007, the amount is $143; and for weeks worked in 2008, the amount is $143.  These wages must have been earned during a 52 week period that is called a base year.

Base Year Period

Your regular base year period consists of 52 weeks that is determined by the date of your claim. The chart below shows what your regular base year period would be if you filed your claim any day between January 1, 2008 and December 31, 2008.

If your claim is dated in:

Your claim is based on
employment from:

January 2008
February 2008
March 2008

October 1, 2006
to
September 30, 2007

April 2008
May 2008
June 2008

January 1, 2007
to
December 31, 2007

July 2008
August 2008
September 2008

April 1, 2007
to
March 31, 2008

October 2008
November 2008
December 2008

July 1, 2007
to
June 30, 2008

Example: Mary Jones filed her unemployment claim as of May 11, 2008.  Her month and year appear in the second box on the left of the chart. This means that her Base Period is from January 1, 2007 to December 31, 2007.

If you do not meet the above requirements but you worked at least 770 hours in employment involving the production and harvesting of agricultural crops during your base year, you may still be eligible for benefits.
Alternate Base Year Period

If your earnings during your regular base year period do not meet the qualifications for a claim, earnings in other base year periods will be reviewed. You may qualify for benefits if you worked at least 20 base weeks (a base week in 2006 is minimum weekly earnings of $123; a base week in 2007 is minimum weekly earnings of $143; and a base week in 2008 is minimum weekly earnings of $143), or a total of $7,200 in any one-year period in the last 1 1/2 years for a claim dated in calendar year 2008. Generally, if you have established 20 base weeks or earned at least $7,200 in any one-year period in the last 18 months, you may qualify for a claim.

Figuring Out Your Benefit Amount
How Much Can You Collect?

Weekly Benefit Rate

The amount of unemployment benefits you may receive each week is your Weekly Benefit Rate (WBR). The amount will be 60% of the average weekly earnings during your base year period, up to a maximum of $560 (in 2008). The maximum amount may change each year.

If you are not entitled to the maximum amount of weekly benefits, you may be able to increase your entitlement with Dependency Benefits.

Total Amount

The total amount of benefits you may collect is called your Maximum Benefit Amount (MBA). The MBA is equal to the WBR times the total number of weeks worked in the base year period. Generally, for every week you worked during your base year period, you may be entitled to a week of benefits, up to a maximum of 26 times your Weekly Benefit Rate.

Example 1: An individual worked 20 weeks during the base year period. His Weekly Benefit Rate is $200. His Maximum Benefit Amount will be $200 times 20 weeks ($4,000).

Example 2: An individual who is entitled to a maximum 26-week claim (because he worked at least 26 or more weeks during the base year period) at a Weekly Benefit Rate of $300 will have a Maximum Benefit Amount of $7,800. (This is because $300 times 26 weeks = $7,800.)

Your unemployment claim will be in effect for approximately one year from the date of your claim. If you return to work before you collect all the benefits in your claim, and then become unemployed again before the one-year period ends, you should immediately reopen your claim (see the section entitled “Apply for Benefits”). If your one-year benefit year expires before you collect all the benefits in your claim, the remainder cannot be paid to you. You would then have to file a new claim for benefits.

 

 

 

Employers:

 

State unemployment laws were set up to help both employees and employers. However, Employers must beware to not take everything the state does as gospel.

 

The State of New Jersey has a 12 % error rate in the payment of claims.

 

Although an employee may be eligible to collect unemployment, the state may be paying either too much money or not properly allocating the cost of the benefit.

 

Your unemployment account is very much like having a checking account with the state.

 

The State annually determines and assigns the rate to your company. The rate is based on the relationship between the current reserve balances to the average taxable wages paid by the employer.

 

This rate determines how much an employer will be paying into their account for the next year.

 

The State also notifies you as to how much they have paid out of your account in claims.

 

The balance left in the account is called a reserve. (This is your checking account balance).

 

Employers should be looking at their current rates and asking, are they correct?

 

If your company has been thru a merger or an acquisition in the last 3 years there is a 50% chance that you have been assigned the incorrect rate and that you are overpaying unemployment taxes.

 

We are finding many companies (our clients) are overpaying unemployment taxes and have received refunds.

 

Are your unemployment rates correct?

 

Are you overpaying unemployment taxes?

 

Do you qualify for a refund?

 

All you have to do is contact us and ask.

 

We offer a no cost review of your current rates.

 

Do you have a question?

 

Let us know your thoughts?

 

You may email george@hbsadvantage.com

 

Hutchinson Business Solutions ……Your CFO on the Go.

 

Creating Opportunities Today,…Defining Savings for Tomorrow.

Visit http://www.hutchinsonbusinesssolutions.com/ to learn more about saving opportunities available for your company.

 

Spread the good news….. share this information with a friend.

U.S. Initial Jobless Claims Rose 22,000 to 378,000  

As reported in Bloomberg .com

March 20 (Bloomberg) — The number of Americans filing first-time claims for unemployment insurance rose last week and the total number on benefit rolls reached the highest since August 2004, signs that firings are increasing.

Initial claims for benefits increased 22,000 to 378,000 in the week ended March 15, more than economists forecast and the highest since the week of Jan. 26, from 356,000 the prior week, the Labor Department said in Washington. The number of people staying on benefits rose to 2.865 million from 2.833 million.

U.S. companies are cutting staff as the biggest housing slump in a quarter century, tighter credit and mounting financial losses push the economy toward a recession. The Federal Reserve, noting labor markets had “softened” as it cut interest rates earlier this week, said it would act “as needed” to promote growth.

“This is pretty much what it looks like heading into recession,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York, said in an interview with Bloomberg Television. “It’s a bad number for the Fed. This is something that might keep them cutting rates.”

Treasuries were little changed after the report, with the benchmark 10-year note yielding 3.33 percent.

Weekly claims were forecast to rise to 360,000 from 353,000 initially reported in the prior week, according to the median projection of 39 economists in a Bloomberg News survey. Estimates ranged from 345,000 to 380,000.

From a company’s perspective

Many companies look to firing or laying off employees to address a downfall in the economy. This may address an immediate need but many fail to realize that this decision lives with them for 4 years.

First, if an employee collects, the payments will be paid out of the State mandated company’s account. The state unemployment programs are set up to mirror that each company has their own checking account.

The state assigns a rate that tells you how much will be put into the account and then notifies you how much has been paid out in claims.

The amount paid out directly affects the balance or reserves held in the account and have a direct relationship in determining what your rate will be over the next 4 years. The state makes a calculation based on the dollar amount of claims paid out, the reserves needed to support future claims as they relate to the taxable wage base.

 Confused yet?

That is the way the states want you to view it.

Should you have any questions about the unemployment or claim process, feel free to contact us. We deal with these issues on a daily basis.

george@hbsadvantage.com

We find many clients have been assigned the wrong rate and our overpaying unemployment taxes.

To learn more visit our website.

www.hbsadvantage.com

We look forward to discussing this with you.