COLUMBIA — A decade ago, South Carolina faced the nightmare prospect of an insolvent unemployment insurance trust fund, leaving lawmakers with no means to provide their out-of-work constituents with crucial financial assistance for everything from rent to medical bills.
The shortfall forced state leaders to turn to the federal government for help, securing loans totaling $1 billion to plug the hole between 2008 and 2011.
On Thursday, Gov. Henry McMaster announced that not only is the fund self-sufficient with a cushion of nearly $1 billion, but for the second straight year the unemployment insurance tax rate for businesses is set to plummet by double digits.
“It’s a great statement on the prosperity we enjoy in South Carolina, we do a lot of things right," he said. "The competition is fierce among, particularly, the Southern states and this will give us another good story to tell, another economic advantage, and that's good for everybody in South Carolina.”
The governor said the unemployment tax levy, on average, will drop 34 percent next year, on top of an 18.8 percent drop in 2019.
Combined, those decreases are expected to yield more than $121 million in savings, freeing capital for site expansions, new equipment purchases and the continued hiring of workers even as the state enjoys an all-time low unemployment rate of 2.9 percent.
“The greatest thing we can do is to make sure that we continue to have economic prosperity and creating jobs for our people,” said state Sen. Thomas Alexander, R-Walhalla, chairman of the Labor, Commerce and Industry Committee.
Ted Pitts, a former legislator who now heads the S.C. Chamber of Commerce, credited a decision in 2010 to make the Department of Employment and Workforce a Cabinet-level agency, assuring accountability for the trust fund that falls under its purview.
State officials in 2015 repaid those federal loans in full and then enacted legislation tasking the department to rebuild the trust fund within five years to a level that wouldn’t require more government intervention.
It was a big ask, because doing so meant private-sector commitments, Alexander said.
“I want to especially thank the business community," he said. "Without your involvement, without your leadership and providing jobs to the citizens of South Carolina, we would not be here today."
Dan Ellzey, who runs the Department of Employment and Workforce, said despite more people than ever holding jobs, the need for innovative training and pilot programs is greater than ever.
As of Thursday, Ellzey said there were 64,000 posted jobs in the state.
“That's an issue we're focused on every day. Every day, we in that agency talk about, 'where are we going to get additional employees from,’” he said.
With a replica Boeing jet in his office and several hard hats accumulated from groundbreakings he’s attended, McMaster said positioning South Carolina for even more business growth remains his priority.
Passing additional savings to businesses, he added, is part of that strategy.
“Our job is to stay ahead of the other Southern states. We’re in the game, and we’re right at the top of it,” he said.
That model airplane is also a symbol of the role manufacturing plays in the state’s economy. Across all 46 counties, the sector employs 2.5 million people – about 12 percent of the total workforce.
“This rebuilt (trust fund) system will lead to reliably lower unemployment taxes while also providing a fiscally sound and sufficient reserve fund that will be there to protect our workforce during uncertain economic times," said Sara Hazzard, president and CEO of the South Carolina Manufacturing Alliance.