The current economic recession has placed significant pressure on the unemployment insurance system as states provide increased unemployment benefits to former employees for a longer period of time.  For 2011, all employers must budget for an increased State & Federal unemployment tax when you consider the economic data and historical trends. 

Currently, 34 states have received borrowed funds from the federal government’s Title XII in order to pay current unemployment benefits.  Current state obligation is at $37 billion with a Dept of Labor prediction that the obligation will grow to $90 billion by 2014.  As a result, employers will continue to experience increased federal unemployment tax costs in 2011 and beyond due to the unpaid Title XII loans.  Many states will not only look to increased tax rates but to an increased wage base to help pay back the loans as well as shore up the trust fund balance.