About EPEP StoreEP BrandsSupportCommunityNews & Info
Blog Home

COVID-19 and the Impact on State Unemployment Insurance

How high unemployment claims have led to increased SUI rates across the US
April 13, 2021

Becky Harshberger

In the years leading up to 2021, State Unemployment Insurance (SUI) rates and wage bases both decreased for many states across the US. Unfortunately, COVID-19 shutdowns have impacted thousands of jobs, from full-time employees to those who gig like many professionals in the entertainment industry. This has led to unprecedented unemployment cases, putting pressure on states and forcing many to borrow from the federal unemployment trust funds.

What is the federal unemployment trust fund and how does it impact SUI?

All states must adhere to a base level of federal unemployment trust fund requirements, and beyond that, each state makes its own rules and regulations. When state unemployment benefits are exhausted from high employment, states can borrow from the federal fund if their own reserves are insufficient.

If the federal unemployment trust fund balance falls below a certain amount, like it did in 2020, states must raise unemployment taxes across the board, for all employers, to repay back their loan causing the SUI rate to increase.

During 2020, 20 states exhausted their own funds and had to borrow from the federal unemployment trust fund to pay weekly benefits. Of those states, CO, GA, HI, KY, MD, MN, NY and OH have increased their maximum SUI rates.

How much are SUI rates increasing?

Well, it depends; some states are higher than others.

For example, New York, required by law, had to increase their maximum unemployment tax rate in 2021 (from 7.9% in 2020 to 9.9% in 2021) because they completely depleted their SUI account trust fund during the peak of the pandemic.

California is usually required by law to increase their SUI rates, but unlike New York, they haven’t built up a high enough reserve (since the Great Recession) to move to lower SUI rates. The maximum SUI rate wasn’t increased in 2021 for California and other states with lower trust fund balances because they were already at the maximum rate allowed.

How long until SUI rates are expected to increase?

Even with federal stimulus payments, SUI rates will likely remain high for the next few years, even for the thirty states that did not borrow from the federal unemployment trust fund. Why is this the case?

Due to pandemic unemployment claims, states still need to rebuild their SUI reserve. As an extreme example, Arizona did not borrow federal unemployment trust funds, but massively increased their SUI rate table in 2021. The AZ max SUI rate in 2020 was 11.8%, the max rate in 2021 is 20.6%! The Arizona wage base remains at $7,000, which surprisingly still leaves Arizona in the middle of the pack when total employer SUI costs are compared. This example also demonstrates the significance of looking not just at the SUI rate but also at the wage base when creating a budget. Hawaii’s maximum 2021 SUI rate of 6.6% looks attractive compared to Arizona, but Hawaii has a 2021 wage base of $47,400. SUI in Hawaii would then be $1,980 versus $1,442 in Arizona.

The long-term impact

History repeats itself, and looking back to the effects of the Great Recession on unemployment tax rates and wage bases, we can see how the impact was felt for years as the economy recovered through annual SUI increases. Similarly, states and employers are now experiencing similar repercussions due to the unemployment surges caused by COVID-19.

Production accountants should anticipate that some states, like California did after the Great Recession, will default in repaying their federal loans. For states that default, the federal unemployment tax rate (currently 0.6% of $7,000 in earnings) will increase by 0.3% a year until the loan is repaid (Entertainment Partners nicknamed the additional amount FUI2).

Expect an increase in federal unemployment taxes in 2022 in the 20 states that borrowed federal funds, unless federal legislature extends the amount of time to pay back the loans or a state that has borrowed decides to use federal stimulus funds to replenish the state’s unemployment fund or finds another way (i.e, issues a bond) to repay the loan.

Topic: COVID-19

Related Content

Master Series: Budgeting for 2022-1

Budgeting for 2022: What Productions Need to Know

12/10/2021
From unemployment taxes and worker's compensation to the price of labor and materials, production costs...
Watch
New York City Imposes Mandatory Vaccination Requirement On Private Employers

New York City Imposes Mandatory Vaccination Requirement On Private Employers

12/22/2021
Starting December 27, 2021, workers in New York City must provide proof of vaccination against COVID-19 to...
2022 Budgeting-sq

Budgeting for 2022: A Production Accountant's Guide

12/15/2021
EP's Payroll Tax, Production Incentives, and Business Development experts explain how inflation,...

Film Commission Report Highlights Covid Costs as Production Ramps Up

12/6/2021
Covid-compliance measures impact production budgets, estimating $90 million or more
EP BLOG_Payroll_Cleanup_Becky_Harshberger_sq

Everything You Need to Know About End-of-Year Production Payroll Cleanup

11/30/2021
Reconciling payroll errors and generating accurate W-2s can be a tedious process. These proactive steps...
film-budget-meeting-sq

Why Accurate Payroll Tax Withholding Matters to Film Budgets

11/16/2021
Wendy Black, EP’s Vice President of Incentive Operations, shares tips for ensuring your production...
Los Angeles Times logo-sq

California productions to spend at least $90 million on COVID-19 safety measures

11/16/2021
A new report has put a price tag COVID-19-related costs, according to data released from the California...
Best Practices for Year-End Payroll Cleanup-Panelists-sq

Best Practices for Year-End Payroll Cleanup

11/15/2021
Payroll tax expert Becky Harshberger shares best practices to help production accounting teams prepare for...
film-festivals-online-or-in-person_sq

Film Festivals: Online or In-Person?

11/9/2021
Producers weigh in on the state of festival season post-pandemic, featuring Divi Crockett and Mike Drake
Master Series Thumbnail-Best practices for accurate payroll tax withholding

Best Practices for Accurate Incentive Payroll Tax Withholding

10/22/2021
Learn how payroll tax withholding impacts a production incentive or film tax credit, and how productions...
5 top payroll tax errors-Becky Harshberger

5 Top Payroll Tax Errors and How to Prevent Them

9/28/2021
Production payroll can be a daunting task, but it doesn’t have to be! Payroll Tax expert Becky Harshberger...

New Terms Under Return-To-Work Agreement

8/30/2021
RTW extension includes new two-part delineation, and the role of the vaccine
Topic: Legal
More
New Terms Reached Under Return-To-Work Agreement: Delineation into Two Parts, and the Role of the Vaccine

New Terms Reached Under Return-To-Work Agreement: Delineation into Two Parts, and the Role of the Vaccine

8/23/2021
In September 2020, the AMPTP and the industry’s Unions issued a Return-to-Work Agreement setting forth...
 Adjusting the W4-Becky Harshberger-Sq

How to Adjust Your Tax Withholdings Using the New W-4

8/17/2021
Making small adjustments throughout the year can save production workers big at tax time!
Los Angeles County Revised Health Order Eases Most COVID-19 Restrictions, Reinstates Masking Requirements

Los Angeles County Revised Health Order Eases Most COVID-19 Restrictions, Reinstates Masking Requirements

8/9/2021
Of note, the June 2021 Order (1) required unvaccinated or partially vaccinated individuals to wear a mask...
Federal OSHA’s New Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace

Federal OSHA’s New Guidance on Mitigating and Preventing the Spread of COVID-19 in the Workplace

8/9/2021
The guidance contains recommendations for maintaining a safe workplace, with a particular emphasis on...
EEOC Approves Employers Mandating Employee COVID-19 Vaccination, with Exceptions

EEOC Approves Employers Mandating Employee COVID-19 Vaccination, with Exceptions

8/9/2021
EEOC declares employers do not violate disability rights or other equal employment opportunity laws by...
Cal/OSHA Updates Standards to Protect Workers from COVID-19

Cal/OSHA Updates Standards to Protect Workers from COVID-19

7/15/2021
Effective June 17, 2021, Cal/OSHA revised its Emergency Temporary Standards (ETS), which now accounts for...
actors on set

Safety on Set Amid Changing COVID-19 Guidelines

6/9/2021
What productions should know as they head back to work

The Beginner's Guide to Federal Payroll Tax Withholding

5/11/2021
Essential information for individual production workers
Producing through COVID women producers panel

Producing Through COVID-19: A Discussion with Six Prominent Women Producers

3/25/2021
Stories of navigating the entertainment industry and producing during a pandemic

Returning to Production: Hair and Makeup Teams Apply COVID-19 Protocols to Life on Set

2/26/2021
Getting back to work: a look inside set life during COVID-19

Payroll Tax Changes and the New Form 1099NEC

2/26/2021
What you need to know before filing for the 2020 tax season

Profiles in Leadership: Martin Mazor, SVP and CISO, Entertainment Partners

2/21/2021
Why Identity is at the Core of Every New Security and Business Initiative

The Beginner's Guide to Production Incentives

2/17/2021
EP helps filmmakers navigate the complex world of film and television incentives

Digital Production Studio

Production Finance StudioProduction Management StudioEnterprise Management Hub

EP Sites

Central CastingEntertainment PartnersEP StoreSyncOnSetThe Production CommunityWe Got POP
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity
© 2022 Entertainment Partners. All rights reserved.