BCW Joins Businesses Across NYS in Opposing Unemployment Insurance Premium Increases

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The BCW along with business groups from across the state sent the following letter this week:

The Honorable Roberta Reardon
NYS Commissioner of Labor
NYS Department of Labor
Building 12
W.A. Harriman Campus
Albany, NY 12240

Re: Unemployment Insurance Premiums and Taxes

Dear Commissioner Reardon,

We, the undersigned organizations representing hundreds of thousands of businesses across New York State, are writing to strongly encourage you to support efforts to curb devastating increases to unemployment insurance premiums.

While some commerce has returned after state-ordered shutdowns, the economic recovery is still a long way away with tens of thousands of businesses – especially small businesses – desperately trying to survive. Even those operating are struggling with significant capacity restrictions, depressed consumer demand, declining sales, sunken revenues, and procurement of sizeable loans to pay everyday business expenses. The National Federation of Independent Business’s (NFIB) nationally recognized Index of Economic Uncertainty reached 98 in October, the second highest reading in the survey’s 47-year history.1

There are close to 500,000 small businesses with employees in New York. These businesses employ half the state’s private-sector workforce, nearly 4 million New Yorkers, and their production accounts for nearly half of the state’s GDP. According to a recent survey by the National Federation of Independent Business (NFIB), 39% of small business owners anticipate that they will be able to operate no longer than 7-12 months under current economic conditions.2 The Partnership for New York City estimates one-third of New York City small businesses will close before the pandemic passes3 and a survey by Yelp indicates that 60% of businesses that have already closed are permanently closed.4 These are sobering numbers for the state’s economy, local communities, and our Main Streets which bring life and vibrancy to our neighborhoods.

With a long road to recovery, New York State must make every effort to limit and mitigate damaging cost increases for businesses in the months and years ahead. Right now, businesses are facing the potential of unprecedented hikes to unemployment insurance premiums as a result of the pandemic. Between March and September, the New York State Department of Labor has provided almost $40 billion in unemployment benefits to more than 3.3 million New Yorkers, which according to DOL is over 18 years’ worth of benefits in just over five months. Furthermore, New York State has already borrowed $7.9 billion from the federal government to pay UI benefits, which will need to be repaid unless it is forgiven. This is an unprecedented amount of money flowing out of the unemployment insurance system that simply cannot be replenished through higher premiums on small businesses. On June 15, 2020, Governor Andrew Cuomo issued New York State Executive Order 202.45 which indicates the Governor’s concern regarding the potentially devastating economic impact of increased unemployment insurance taxes on employers and clear direction to the New York State Commissioner of Labor “to issue a finding related to experience rating charges as permitted by the Families First Coronavirus Response Act.” This executive order has since been extended.

As a business community, we wish to be a collaborative partner with the Department of Labor, the executive branch, and legislative leaders to avoid this potential catastrophe and we strongly urge our leaders to responsibly address unemployment insurance without passing along unmanageable premium hikes to small businesses.

We recognize the potential for future federal Coronavirus relief legislation to – at least in part –address state unemployment insurance cost concerns, but our state and local economies cannot bet their futures on the possibility of federal action during such an uncertain and politically fractured environment. We recommend that the Department of Labor, Executive, and legislative leadership consider any possible approach to avoid or mitigate expected unemployment insurance premiums for the state’s local businesses and job creators:

• Apply any remaining federal CARES Act funding to support New York’s depleted unemployment insurance trust fund and allocate future financial support from the federal government to bolster the UI trust balance to reduce the large increases in state UI taxes. Many states across the country used a portion of their CARES Act funds to replenish their UI trust funds.
• Prevent claims for UI arising from COVID-19 to be included in businesses’ experience rating charges. Countless businesses were forced to close their doors for reasons beyond their control, and most of those doors remained closed for months as New York remained on PAUSE. As a result, revenues drastically fell or were non-existent for weeks and months. Unfortunately, this forced business owners to make very difficult decisions, including having to furlough or lay-off employees. UI tax rates are based, in part, on an employers’ experience rating, which is determined by the number of employees and past unemployment claims. Businesses will see an astronomical increase in UI rates at no

fault of their own if COVID-related layoffs are included as part of an employers’ experience rating. Many of these small businesses have reopened under significant capacity and operational restrictions and are barely approaching profitability. Further, many multi-national corporate retailers were able to remain open during NY PAUSE under the label of “essential” while independent local retailers were arbitrarily closed. These employers do not deserve and cannot absorb higher unemployment insurance costs while their corporate competitors were able to remain in operation.

Absent federal funding, New York should delay automatic UI tax increases and/or spread the increases out over additional years. New York State law requires an automatic tax increase if money is borrowed from Treasury for the UI Trust Fund. In other states, legislation has been approved or introduced that would delay and spread out the tax increase over several years to help alleviate the sudden and dramatic escalation in UI taxes. Increasing the wage base to spread out potential increases over a number of years and reducing the urgency of replenishing the UI trust fund is also worth consideration from the Department.

While the exact premium increases are unknown at this time, they will undoubtedly be astronomical to offset the layoffs resulting from the state-mandated shutdowns and the benefits paid due to the pandemic. In Massachusetts, businesses are facing a nearly 60% increase in UI taxes for 2021 and New Jersey is estimating that businesses will pay an additional $919 million in UI taxes. If New York’s UI tax increases mirror its neighboring states, small businesses, and employers who are already on the brink of collapse, simply won’t be able to afford it. New York will see even more small businesses permanently close and more jobs permanently lost.

On behalf of businesses across New York, we look forward to working with you to ensure a full economic recovery and the loss of as few businesses as possible.

Sincerely,

Advocacy Coalition of Rochester Area Chambers (ACRAC)

Amherst Chamber of Commerce

Associated Builders and Contractors,

Empire State

Associated General Contractors of

New York State

Big I

Buffalo Niagara Partnership

Capital Region Chamber

CenterState CEO

Chamber Alliance of NYS

Chemung County Chamber of Commerce

Commerce Chenango

New York Alliance For Environmental Concerns

New York Association of Convenience Stores

New York Farm Bureau

New York State Builders Association

New York State Economic Development Council (NYSEDC)

New York State Restaurant Association

New York State Vegetable Growers Association

NFIB

Niagara USA Chamber

North Country Chamber of Commerce

Northeast Agribusiness and Feed Alliance

Northeast Dairy Producers Association

Northeastern Retail Lumber Association

Orange County Chamber of Commerce

Corning Area Chamber of Commerce

Cortland County Chamber of Commerce

Delaware County Chamber of Commerce

Dutchess County Regional Chamber of Commerce

Empire State Forest Products Association

Empire State Restaurant & Tavern Association

Food Industry Alliance of NY

Greater Binghamton Chamber

Greater Olean Area Chamber of Commerce

Greater Rochester Enterprise

Pittsford Chamber of Commerce Rome Area Chamber of Commerce The Business Council of New York State The Business Council of Westchester Trucking Association of New York Ulster County Regional Chamber of Commerce Unshackle Upstate Wyoming County Chamber of Commerce

CC: Governor Andrew Cuomo

NYS Senate Majority Leader Andrea Stewart Cousins

NYS Assembly Speaker Carl Heastie

NYS Senate Minority Leader Rob Ortt

NYS Assembly Minority Leader Will Barclay

Hon. Anna Kaplan, Chair NYS Senate Commerce, Economic Development, Small Business Committee

Hon. Al Stirpe, Chair, NYS Assembly Small Business