After a year of historic layoffs and unemployment claims that threatened to bankrupt the state Unemployment Trust Fund, businesses that managed to survive could soon face a fatal blow in the form of a massive hike to the unemployment insurance tax directly tied to loss of workers.
“Any cost increase right now is throwing heavy rocks at a drowning person,” Washington Hospitality Association CEO and President Anthony Anton said. The hospitality industry has been disproportionately hit by the economic shutdown; Anton estimates that 35 percent of association members will go out of business as a result.
The hospitality industry has been particularly hard hit, as discussed in a Seattle Times op-ed by Ray’s Boathouse owner Doug Zellers, who writes,
At this time last year, the restaurant industry employed more than 340,000 people in the state. As of the latest numbers, 106,000 of those team members are no longer working. Hundreds of restaurants across the state have either closed permanently, closed for the season, or scaled their operations back to a skeleton crew. And in Seattle, we’ve seen some of our iconic restaurants close.
He says the industry’s economic impact is spread wide.
In normal times, restaurants put 96 cents of every dollar right back into the local economy. At Ray’s, that means 96 cents of every dollar on your bill goes to area farmers, fishers, suppliers and restaurant staff — as well as rent and utilities, of course.
Seattle may be known for our tech economy, but our tourism, hospitality and restaurants are also a huge economic driver. Any recovery of our state will include a strong recovery of these industries.
Right. And as Anton says, increased UI taxes add new burdens on recovering businesses. More from the Lens.
Anton said the tax hike will be especially felt by small employers who are in the lowest experience-rated tax class, with little unemployment history prior to this year.
In an interview with TVW, Senate Ways and Means Committee member Sen. Randi Becker (R-2) said that unemployment tax payments for certain businesses could increase by as much as 700 percent “for something that these employers did not have any control over,” adding that if the tax hike happens “that will close many more small business stores.”
Read the article for more detail. And note this Senate Ways and Means presentation on the UI trust fund.