Workforce Dept. struggles with law

Unemployment

COLUMBIA -- South Carolina's Workforce Department said Tuesday that businesses with the best records on unemployment would have to pay a lot more if changes are made to help businesses with the worst records pay less.

South Carolina last year was one of the first states in the nation to overhaul its jobless benefits system as it scrambled to find ways to pay off $933 million in federal loans that have kept unemployment checks flowing after the Great Recession.

That overhaul prompted a backlash as employers with the worst unemployment records received bills last month that increased their rates for each employee to $1,128, or about $660 more than they had paid.

They called on legislators to give them a break, and legislators are tweaking the new law. But they said that giving a big break to employers who laid off the most workers means hefty increases for employers who weathered the recession without big layoffs.

The Workforce Department offered several scenarios for changing the rate system to benefit employers with the worst records.

It said 5,600 employers with the worst records could save between $20 and $145 per worker if 45,000 employers with the best records, now paying $10 per employee, would pay $73 to $111 more.

South Carolina splits employers into groups of those who have more benefits paid out than contributions made. The new system forces sharply higher payments for those with the largest deficits. About half of the employers in those higher payment groups have 50 or more workers on their payrolls.

Sen. David Thomas, a Greenville Republican, said employers with the largest deficits also employ about 40 percent of the state's workers. They include 2,175 manufacturers with more than 132,000 employees.

"I'm hearing that the stun factor, the shock factor is so great with some of these that have gone from $200 to $1,000 per employee that not only are they being told by home office, 'Well, you can't do any new hiring, but you're going to have to leave South Carolina because we can't compete with our Mexico market that's in competition with you,' " Thomas said.

John Finan, the Workforce Department's executive director, said about three dozen states are dealing with repaying federal loans, and South Carolina is the third state to come up with ways to repay the loans.

"So we're on the tip of the spear as far as addressing it early," Finan said. North Carolina, for instance, owes more than $2 billion, and its highest rates are already higher than South Carolina's.

"So we're just out in front of other states. The good news is we're going to fix our problem earlier and our rates should start coming down earlier, while the other states are ramping up to fix their problems," Finan said.