Employer contribution to stay steady with likely unemployment rise

CARSON CITY – Nevada’s high jobless rate is expected to climb even higher next year but businesses won’t have to contribute more to pay benefits to the unemployed workers.

While some states, such as California, are struggling to pay unemployment benefits, Nevada’s fund is solvent, said Cynthia Jones, director of the state Division of Employment Security.

Jones, acting Thursday on the recommendation of the Nevada Employment Security Council, agreed the average contribution rate should stay at 1.3 percent of workers' wages.

The fund, financed by assessments on employers, stood at $803 million at the beginning of 2008 but it is expected to dip to $492.1 million by the end of 2009.

Jones and division economist David Schmidt said the philosophy has been to raise rates during good economic times and keep them low during poor times.

“It’s not a good time to increase rates on employers,” said Schmidt.

The jobless rate in August was 7.1 percent, its highest mark in 23 years. And estimated 97,300 people were out of work. The department is predicting it will hit 8.5 percent next year.

The 8.5 percent mark would be the highest since 1983, when it hit 9.7 percent.

William “Bill” Anderson, chief economist for the division, noted the construction industry lost 12,000 jobs in the first eight months of this year.

He predicted job growth would “achieve some stability” in 2009 by growing three-tenths of a percent. He said there would be 44,000 new jobs by 2011.

There are an estimated 60,000 employers in Nevada and their assessments to the unemployment trust fund range from a low of 0.25 percent to 5.40 percent for the employers with the worst turnover rates.

New businesses pay a 2.95 percent rate on the wages of their workers and that stays in effect for several years until they get an experienced rating.

The trust fund is expected to collect $365.9 million from those 60,000 employers next year with the 1.3 percent average rate.

Jones said she would hold a public hearing to gather comments whether to continue with the average 1.3 percent. That hearing has not been set.

The rates paid to unemployed workers range from $12 to $393 a week, depending on their salaries when on the job. And those payments are expected to be increased in July 2009 based on economic statistics.

Cy Ryan may be reached at (775) 687 5032 or [email protected].