The Future Unemployment Insurance Effect on Employers Due to the Recession

On the 23rd of October 2009, the State of Maryland Department of Labor, Licensing and Regulation issued a letter to companies doing business in Maryland.  This letter summarizes the impact of the dramatic increase in the number of unemployment claims by Marylanders.  The letter states “Over the past two years, claims have increased an unprecedented 92%.”  So, like many states, Maryland’s Unemployment Insurance Trust Fund, cannot sustain the current outflow and must adjust the unemployment insurance rates higher to compensate.  Therefore, in 2010, Schedule F rate table will be in effect, which is the highest of the six rate tables.  This change will add additional financial burden to Maryland companies already having a tough time through this economic recession.  As states shift the unemployment insurance financial burden to companies as Maryland is doing starting in 2010, companies will be forced to re-evaluate hiring personnel due to this additional cost.  Instead, companies will look to shift this burden to outsourced firms.  In addition, depending on the result of the potential new national healthcare plan and the financial impact on businesses, companies might be inclined to accelerate the transition to outsourced companies.

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