Florida should have better handled unemployment

College students looking for a job in Florida may have trouble finding it as the unemployment rate rises and employers have a new reason not to hire: the dramatic increase in the unemployment tax.

The tax increase is supposed to replenish the state’s unemployment fund, which pays benefits to the jobless. The unemployment rate reached 11.2 percent in September, while the fund went from more than $1.3 billion last year to zero in August, according to the St. Petersburg Times.

Employers pay a minimum unemployment tax of $8.40 per employee, but next year that rate will jump to $100.30, state officials announced Wednesday. The maximum will increase from $378 to $459.

While unemployment benefits are a vital service, unemployment will go down only if small businesses are more willing to hire. Small businesses create about 60 percent of new jobs, according to the Times. Florida should be encouraging businesses to hire – not taxing them.

Florida is among 33 states that plan to raise unemployment taxes next year, according to the National Association of State Workforce Agencies. Businesses across the nation are worried they will be unable to hire more employees because of the tax, according to The Associated Press.

By state law, if the unemployment trust fund falls below 4 percent of the total taxable payroll, then the unemployment tax must automatically rise. State officials’ hands may be tied, but they could have done more to ensure the funds did not drop so low.

Florida is now borrowing $300 million a month from the federal government to pay unemployment benefits, according to the AP. The state will be penalized if it can’t pay off those loans, which could translate to even higher taxes in the future.

Quickly restoring funds will hurt Florida’s small businesses, but so will not repaying the federal government. The unemployment tax varies and it’s generally higher for businesses that lay off employees. So, if the tax forces employers to lay off workers, their taxes will only be higher the next year.

The Florida Legislature rejected $444 million in stimulus money in April that would have gone to unemployment compensation. State Republicans rejected it because Florida would have to expand its unemployment coverage to be eligible for the funds, according to the Times.

Democratic Sen. Tony Hill unsuccessfully sponsored a bill to accept the money and believes it could have saved employers as much as $100 million in unemployment taxes.

Hill said to the Times that it’s not too late to accept the money. “We can easily tap this money and lower the expected increase on employers.”

Many states cut their unemployment taxes when times were good, according to the AP, which now seems like a bad move in hindsight. There is something fundamentally flawed about a tax that goes down when times are good and up when times are bad.