New York owes billions of dollars in unemployment insurance to the federal government and advocates are worried the lingering effect could have long-term consequences for businesses in the state.
When businesses and public gathering spaces were shuttered two years ago in response to the COVID-19 pandemic, millions of New Yorkers lost their jobs. After billions of dollars in unemployment was paid, businesses may be left holding the bag. Justin Wilcox of Upstate United said firms are already struggling with inflation, hiring and supply chain concerns.
“Adding this on top of that – this is really back breaking and crushing for businesses that survived the pandemic,” said Wilcox, the group’s executive director.
New York lawmakers and Gov. Kathy Hochul need to take action by easing unemployment insurance taxes on businesses – something that did not get done in the budget. The Democratic-led state Senate approved a measure earlier this year that is meant to address the tax issue.
But business organizations argue action is needed to be completed by the end of the legislative session on June 2, and before higher interest payments kick in.
“That’s going to take a little bit of work and frankly we’re hoping that we can work with the Legislature and the governor to take some of the excess funds and apply those to the debt,” Wilcox said.
New York’s unemployment rate has recovered in recent months, but as of March, continued to lag the rest of the country. Hard-hit sectors like tourism and hospitality have had a longer recovery period, leading to sustained high unemployment in places like New York City.
New York was not the only state that saw skyrocketing unemployment during the early days of the pandemic. But Ken Pokalsky of the Business Council said New York is one of the only states yet to resolve the issue.
“New York is typically a leader among states in dealing with significant issues,” Pokalsky said. “And this is one where we’re becoming an outlier, basically one of the only major states that has basically done nothing.”
For consumers, this could mean the high cost of unemployment insurance taxes made worse by the billions of dollars of debt will be passed on to them – making products and services even more expensive as a result.
“Without something happening, we’ll be paying off this debt and state employers will be at the max level of UI taxes well into the 2030s,” Pokalsky said. “This is going to be a long-term cost burden on businesses.”