N.D. Unemployment Insurance Tax Rate Drops for 3rd Year

November 29, 2007

North Dakota’s unemployment insurance tax rates will be falling for the third straight year, with the average rate dropping below 1 percent for the first time since 1997, Gov. John Hoeven says.

Maren Daley, director of Job Service North Dakota, said the lower rates would save North Dakota businesses about $10.8 million in 2008. They take effect Jan. 1.

“Most employers do appreciate lower tax rates, as far as how it builds the business climate,” Daley said in an interview.

The average rate is declining from 1.18 percent of taxable wages to 0.95 percent next year, Hoeven said. Businesses will pay unemployment insurance taxes on the first $22,100 of each worker’s wages in 2008, an increase from this year’s wage base of $21,300.

“It reflects the growth in the economy, as well as the job gains,” Hoeven said. “It’s not only having more people employed, but a larger wage base, which enables us to … reduce the unemployment insurance tax rate, and increase the benefit for unemployed workers.”

This year, a business that was assessed the average jobless tax rate would have paid a maximum of $251.34 per worker into North Dakota’s unemployment insurance trust fund. Almost 20,000 businesses pay unemployment taxes.

In 2008, the average rate multiplied by the increased maximum wage base will equal $209.95 per worker, a decrease of 16.5 percent. The average tax rate of 0.95 percent is the lowest since 1997, when it was 0.85 percent, Job Service North Dakota data show.

Unemployment tax rates in 2008 will range from 0.20 percent to 9.86 percent, Daley said. This year, the range is 0.34 percent to 8.09 percent. At the end of last year, which is the most recent number available, 335,718 North Dakota workers were covered by unemployment insurance.

Daley said the new rates are expected to garner $44.4 million in payments from businesses next year, while the state expects to pay $49.2 million in benefits. The state’s jobless insurance trust fund is being deliberately reduced; it now has a balance of $111.7 million, and needs only about $72 million, Daley said.

Last summer, the maximum weekly benefit amount rose from $351 to $385, and it is expected to increase again in July, Daley said. The average weekly benefit is $264. Workers may draw unemployment for up to 26 weeks, although unemployed North Dakotans collect an average of 11 weeks of benefits

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