Washington’s Unemployment Insurance Trust Fund (UITF), which pays benefits to unemployed workers, appears to be stabilizing. According to June projections by the Washington Economic and Revenue Forecast Council, the fund is slowly replenishing after the massive drawdown to deliver benefits to unemployed workers during the pandemic. This is good news for employers.
Entering the 2021 legislative session, the November forecast projected the UITF would become insolvent during 2021, requiring a combination of federal loans and increased taxes on employers to maintain benefits and replenish the fund. The UITF is funded entirely by employers, and the forecast showed UI taxes would increase by 700%, or more, on many employers.
Fortunately, that forecast did not bear out. The November forecast failed to capture the pace that Washington’s economy rebounded during the Fall. As workers returned to work, the UITF stabilized, albeit at a low level. Due to the improving situation, the UITF entered 2021 with about $412 million more than the November forecast predicted.
That financial cushion has proven to be vital. As more workers return to work, the UITF continued to stabilize. However, more work remains.
The latest weekly statistics from the Employment Security Department show that more than 380,000 workers continue to collect unemployment insurance benefits, thereby continuing pressure on the UITF. Washington Retail welcomes the decision to reinstate job search requirements for workers collecting UI benefits. Hopefully, that will accelerate the pace of workers returning to work and relieve pressure on the UITF.
The June forecast projects increased employer taxes beginning in 2022. The Legislature made several substantive changes to UI taxes to provide relief from COVID-19 related costs in 2021. Those changes did not capture all COVID-19 unemployment insurance charges. WR will continue advocating for employers to be relieved of all COVID-19 related unemployment insurance costs. If the economy continues to rebound and workers return to work swiftly, the financial condition of the UITF will warrant such relief.