Hey Massachusetts:
You Broke It.
You Need to Fix It.
MA’s unemployment insurance system has been broken for decades. Now, businesses are being asked to pay for the state’s $2 billion blunder.
Tell your legislator: Businesses shouldn’t pay for the state’s mistake.
The Problem
Massachusetts’ unemployment insurance system was already headed for disaster.
Our businesses big and small pay some of the highest rates in the country. And yet, the benefits that are paid out consistently outpace employer contributions.
To make matters worse, the state now owes the federal government $2.1 billion as a result of misallocated state unemployment benefits that were paid out during the COVID pandemic.
Without a fix to the system, Massachusetts employers will see a tax hike on top of the already high rates they pay.
71 percent of Massachusetts voters agree. It’s not fair for businesses big and small to pay for the state’s mistake.
Why We Need a Fix Fast
Protect Against Costly Tax Increases
Businesses in Massachusetts are already facing some of the highest UI tax rates in the nation. Without resolving this issue, the state could impose additional taxes to cover the debt—directly increasing costs for employers.
Maintain Competitiveness
Massachusetts’ high employer tax burden contributes to its declining national ranking for competitiveness. A less competitive tax and business environment can deter talent, especially if other states offer a lower cost of living.
Ensure Economic Stability for Workers
Fixing the current crisis would prevent further disruptions and improve the state’s attractiveness for business investment. High UI debt may signal a less resilient system for supporting unemployed workers during economic downturns.
Businesses should not bear the financial burden of repaying a debt they didn’t cause. If the state government broke it, the government should be the ones to fix our state’s UI system.
Learn More About $2.1 Billion
During the COVID-19 pandemic, the state received relief funds from the federal government for federal unemployment benefits. However, a recent audit discovered that the previous administration actually misspent these federal funds on unemployment benefits which should have been covered by state funds.
The current administration discovered the mistake in 2023 and began finding a way to resolve it. They reached a deal with the federal government this year that states Massachusetts must repay the federal government $2.1 billion over the course of ten years. The deal shaved down some of the debt, which could have “exceeded more than $3 billion once penalties, fees, and interest factored in.”
As it stands, the $2.1 billion will be paid out of the state’s Unemployment Insurance Trust Fund, which is primarily funded by a tax on Massachusetts employers. Without any reforms or an alternative plan to repay the debt, once the state begins paying back the debt in 2026, businesses can expect costs to increase — on top of the already high rates they pay in UI taxes.