By AUDREY McAVOY, Associated Press
HONOLULU (AP) — Hawaii Gov. David Ige signed legislation Tuesday temporarily lowering the rate of unemployment insurance that employers must pay for their workers.
The surge in the number of unemployed since the coronavirus pandemic began last year has quickly drained the Hawaii Unemployment Insurance trust fund. This triggered a large increase in tax rates under the old law to replenish the fund.
To avoid employers having to shoulder this burden at a time when companies are already grappling with pandemic public health restrictions and a sluggish economy, world leaders have decided to lower the rate employers will have to pay for 2021 and 2022 .
Without the new law, employers would have had to pay an average of $1,800 per employee per year to the trust fund, but under the new law that average drops to $850. That year, the average payment was $620.
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“If we hadn’t acted today and gotten to this point, employers would have been hit with very high unemployment rates, especially when they could least afford it,” Ige said at a news conference before signing the law.
The Hawaii Unemployment Insurance Trust had balances of approximately $500 million as of March 2020. In April, the unemployment rate rose to 23.8% and in just a few months the trust fund’s balance fell to near zero as a flood of workers claimed benefits. The state began borrowing from the federal government in June to replenish the fund. So far, the borrowed amount is around 700 million US dollars.
Ige said the latest round of coronavirus relief legislation under consideration in Congress could include some funds that the state could use to pay back some of that loan.
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