The Commonwealth is best served by a public system of unemployment compensation
that helps alleviate the potential economic hardships of the involuntarily unemployed
while these individuals work towards transitioning back into the workforce. The system
should provide economic security while incentivizing claimants to re-enter the workforce
as quickly as possible.
Pennsylvania’s unemployment compensation system is almost entirely funded by employers, who pay among the highest UC taxes in the country. Pennsylvania employers
pay the 4th highest average tax rate on total wages, according to first quarter 2018 data
from the U.S. Department of Labor, whose rankings account for differences in the
amount of wages subject to tax, known as a state’s taxable wage base. And according to
the Tax Foundation’s 2018 State Business Tax Climate Index, Pennsylvania’s UC taxes
ranked as the most damaging to employers, taking into account maximum and minimum
rates, additional costs and complexity.
Excessive UC costs and an unsustainable system can be a deterrent to job creation and
brings instability to a program that serves as an important safety net. The Pennsylvania
Chamber of Business and Industry opposes any broad-based UC tax increase proposal
and supports changes in the law that promote fairness, help control costs and ensure
solvency of the UC trust fund.
Specifically, the PA Chamber supports:
- A system limited to temporary unemployment benefits only for those who were
clearly attached to the workforce, lost their job through no fault of their own and are
actively seeking new employment;
- A tax rating system that fairly determines employer tax rates by considering an
employer’s past experience;
- Strict enforcement of the work-search requirement;
- Benefits that are based on prior wages earned in covered employment;
- A UC Trust Fund that is reactive to fund balance levels in order to be solvent and
avoid the need to borrow from the federal government; and
- Legislative and administrative efforts to combat fraud and abuse of the UC system
and hold perpetrators accountable
