What would you do if your business lost more than $1 billion in 18 months?
First, you and I would be fired. Your successor would then make the decisions -- but I doubt one of the decisions he would make is to send the bill to customers, demanding short payments in amounts too huge for some of them to pay without jeopardizing the health of their businesses.
This is exactly the news thousands of employers will get as they open their mail this week and see their new South Carolina unemployment insurance rate. This will cost small and large businesses thousands and even millions of dollars more for years to come. Could this come at any worse time?
Businesses that have had layoffs or separations during the past seven years should expect to see these massive increases, paying from $100 more per employee per year to up to a brutal $1,000 or more. But there is something that you can do.
IF YOU ARE ONE of the thousands of companies that has been forced to lay off workers -- therefore most likely to receive a large unemployment insurance rate increase for 2011 -- look up your state Senate and House members. Tell them that this increase at this time will hurt your ability to compete and will hurt your ability to hire workers back.
How did the state get here? For years, the South Carolina Employment Security Commission wrongly doled out unemployment insurance benefits to individuals whose reasons for termination did not merit state unemployment benefits. This included employees who had been fired for cause: intoxicated on the job, stealing, taking drugs, insubordination and other egregious acts. Consultants hired by Sen. Greg Ryberg's Senate Labor Committee estimated this cost to be 47 percent of the total unemployment fund wages paid out! Who was watching the farm?
WHILE THIS ABUSE was occurring, the economy collapsed and the unemployment insurance trust fund went from a positive balance of $300 million to a negative of $900 million. Now, because no one was minding the trust fund properly, businesses are expected to shoulder the entire burden of paying back this deficit. This is not right.
It is critically important that South Carolina begin paying off its debt to the federal government. It is equally important that the fund adequately cover unemployment benefit payouts each year. But it is the method and timing in which these increases are hitting South Carolina businesses that is wrong, and must and can be changed by your call.
South Carolina is still recovering from its worst economy in decades. Why should businesses alone have to bear the cost of a nearly $1 billion mistake? South Carolina businesses need help from our legislators. Instead we are getting tax-and-spend responses. If this worries you as it does me, I implore you to contact your state legislators today.
(The writer is president of MAU Workforce Solutions in Augusta, with four offices in South Carolina.)