Massachusetts Chambers Policy Network Statement: Employers Need Solutions to Rebuild Trust in UI System

The Springfield Regional Chamber was recently notified by the Massachusetts Department of Labor and Workforce Development of an alarming situation regarding the Department of Unemployment Assistance (DUA). We will continue to watch the situation closely. As a member of the Chamber Policy Network, we have added our voice and collaborated on this letter, which reads as follows:

The Massachusetts Chambers Policy Network is deeply concerned that a routine audit found that the Department of Unemployment Assistance’s (DUA) wrongly used $2.5 billion in federal money to fund state unemployment benefits during the previous Administration. The Healey Administration is now working with the federal Department of Labor on how to rectify the error. We appreciate the timely communication and transparency of the Healey Administration regarding the discovery of this error and the proactive and cooperative dialogue with the business community. As policymakers uncover more details about this discrepancy and shift their focus to solutions, the MA Chambers Policy Network strongly encourages policymakers to hold employers harmless in any remedial action necessary.

In our main streets, downtowns, and business hubs across the state, only employers pay for unemployment benefits through billions of taxes paid into the Unemployment Trust Fund. The COVID-19 pandemic, and the resulting high jobless rates due to government mandated shutdowns, put enormous strain on the state’s unemployment insurance (UI) system. Through a combination of ongoing employer payments, federal loans, and federal funding, Massachusetts distributed over $34 billion in benefits to claimants during the heights of the pandemic.

To repay federal loans, Massachusetts issued bonds that will be repaid through COVID-19 UI assessments on employers over the next decade, in addition to normal UI taxes. Employer assessments form the financial support to the state’s UI system and are already paying for the impacts of the pandemic on the UI system. As small to large businesses navigate the challenges of this post-pandemic recovery, they should reasonably expect that the Department can administer the UI system in a responsible and transparent method. Massachusetts’s UI system already ranks worst in the nation (50th) by the Tax Foundation before considering recent revelations of fraudulent claims, overpayments, and accounting errors. This is a
significant competitive disadvantage for current and future employers operating in Massachusetts and necessary management reforms are long overdue. Our businesses are the engine of our economy, and they depend on a functioning and effective UI system, not a system with a history of fraud and poor communication.

We acknowledge that the Healey Administration inherited this problem, and we look forward to working collaboratively on solutions. While the business community will collaborate, we urge policymakers to focus on solutions that will not place the burden of replenishing the UI Trust Fund on employers who have already borne the burden from DUA’s errors and government-mandated shutdowns.

Importantly, we urge the Administration to take this opportunity to reimagine the Department and audit its activities, including its ability to prevent fraud, accurately determine eligibility, and communicate to the business community and other stakeholders in a clear, timely, and transparent manner. Reviewing the agency and making long-needed improvements will send a positive signal to the business community and help restore trust in the state’s UI system.

Massachusetts Chambers Policy Network
James E. Rooney, President & CEO, Greater Boston Chamber of Commerce
Tim Murray, President & CEO, Worcester Regional Chamber of Commerce
Diana Szynal, President, Springfield Regional Chamber of Commerce
Rick Sullivan, President & CEO, Western MA Economic Development Council
Karen Andreas, President & CEO, North Shore Chamber of Commerce
Peter Forman, President & CEO, South Shore Chamber of Commerce
Paul Niedzwiecki, CEO, Cape Cod Chamber of Commerce
Greg Reibman, President Charles River Regional Chamber
Rick Kidder, Co-CEO, Michael O’Sullivan Co-CEO, One SouthCoast Chamber
Jonathan Butler, President & CEO, 1Berkshire