By Brooke Thomson
President & CEO

The Massachusetts Unemployment Insurance system will be $300 million in the red by the end of 2028, according to projections issued by the state last week.

The Annual Outlook Report on the status of the UI Trust Fund forecasts that the state will continue to pay more in jobless benefits than it collects from insurers to cover those costs.

The projections assume that the unemployment rate will remain under 4 percent for the next four years. State officials see the jobless rate hitting a ceiling of 3.7 percent by the end of 2024 and then shedding a few hundredths of a percentage point in subsequent years. The state’s unemployment rate at the end of August was 3.7 percent.

The report also does not include $2.5 billion in federal funds that Massachusetts spent in error on jobless benefits during the pandemic. The Healey Administration continues to work with federal officials to resolve that gap and minimize the impact on Massachusetts employers.

What does all this mean for the 3,400 member companies of AIM?

The state report projects that taxes on employers to fund benefits will climb to Schedule G, the highest level, by the end of 2028. How much each employer owes can vary based on both economic factors and its individual “experience rating,” which is calculated based on a business’s unemployment history. Businesses owe taxes on the first $15,000 in wages per employee.

AIM is working closely with the Executive Office of Labor and Workforce Development, and Secretary Jones is committed to engaging AIM and the business community, along with all stakeholders, moving forward.

In a recent statement, her office shared the following.

“As our administration looks for changes in economic and labor market conditions that may impact the trust fund, we are committed to working with stakeholders to ensure the state is best positioned to address any challenges it faces in the future. We will continue our work to stabilize the trust fund while maintaining benefits for impacted workers and support for employer partners.”

This report confirms something AIM members have known for a long time; the state’s unemployment insurance system is in desperate need of reform. We look forward to partnering with the Healey Administration and the legislature to build a sustainable system that supports employees and is affordable for employers.

Sam Larson, AIM’s Vice President of Government Affairs, represents your interests on the unemployment insurance issue. Please contact Sam, slarson@aimnet.org, with questions about the state report and what it will mean to your company.