The current cost to employ is too high. Since 2001, an increase in minimum wage, increase in unemployment insurance, and an increase in workers compensation insurance accounts for a significant increase in unemployed workers.

1. Unemployment Insurance

The current unemployment benefits table for California states that benefits cover all people who earn over $900 per quarter. Why do the unemployment fund runs out of money? The state under collects, then over collects, while borrowing federal funds that charge interest. This is costly to a state during recession.

The current employer rate for UI is 6.2% on $7000.00 of an employees earnings. There is a penalty of 15% once the UI fund is below the limit.

That is another cause for unemployment. There are tax credits of up to 5.4% to employers but not all employers are eligible.

A. Why not remove the UI tax from employees earning less than $75.00 a     week, since they are not eligible for benefits. Also, decrease the UI rate to 2% and remove the cap of $7000.00. Those who earn more, collect more unemployment, and should contribute more.

2. The 2009 reported ratio of the State Workers Compensation Fund is 3:1. That is 300% more than is paid out. The State auditor reported over 38 Billion in the State Workers Compensation fund.

B. There should be a cap on reserves of 1.5:1. The amount refunded to employers from the State Workers Compensation fund should be 19 Billion over the next 3 years. While modifying the current collection rate to maintain the 1.5:1 ratio and not to exceed it.

This would provide the employers with a lower cost to employ, provide revenue that would assist companies in growing business and provide incentive for new businesses. Raising employer taxes results in and increase in the cost to employ, loss of jobs, and increases incentive to do business in other states.

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