The Unemployment Compensation Problem

Florida and other states may see a vicious cycle in their unemployment trends next year thanks to increases in unemployment compensation taxes. For Florida, the AP reports the following:

The minimum tax will jump from $8.40 per employee to $100.30 — an almost 12-fold increase — while the maximum will go up from $378 per employee to $459.

That may, especially in a time of recession, take away money from employers which may have been used to actually hire new employees. This could further exacerbate the unemployment situation. This can be added to the fact that some have already argued that extensions on unemployment benefits can in some cases serve to incentivize people to put off looking for a new job.

Well-intentioned government solutions often create more problems through unintended consequences that only make things worse. In this case, the new problem created may be more unemployment.

One Response to The Unemployment Compensation Problem

  1. […] for the new year: increased unemployment compensation taxes for Florida employers. As I’ve blogged about previously, employers could see their taxes for this fund increase to as much as 11 times what they have been […]

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