Well, I am happy the Presidential election is behind us and I look forward with hope. I hope that democracy gets stronger and our country gets stronger from the many challenges we confront today. We are resilient and we will keep struggling to succeed. We’ve found this vibe at ProService. It's been a very challenging year, but I see how much we have done and am amazed. We are only accelerating. Advice to save your PPP cash and help with business planning – check! Pandemic Rebate – happening! Covid Navigator – launched! Today, we bring forth another big initiative. Please read on!
At ProService, we believe it's our job to look ahead and help predict, manage and mitigate cost increases for Hawaii employers. We don’t just pass on the news that rates are rising. We actively advocate and work every angle to manage and contain costs. Our job is to advocate for our clients as your trusted partner. This is especially true when times are tough. More than ever we believe our role is to help you navigate.
To this end, we have taken the lead to attack a large and looming issue that affects you; that is, significant scheduled increases in State Unemployment Insurance taxes in 2021.
What is the State unemployment tax (SUTA) issue?
In Hawaii, employers are 100% liable for the cost of unemployment insurance. The cost is paid through a payroll tax, and employers’ contributions are paid into a state trust. Entering 2020, we had 2.8% unemployment and the trust was healthy. When Covid-19 hit, unemployment rocketed to 23.8% and the trust fund sank into a $1 billion dollar deficit, and Hawaii, like all other states, took a federal loan to cover the gap.
By state law, Hawaii must raise its SUTA rate to fund the depleted trust. Unless something is done, rates will automatically increase to schedule H, the highest level, which will be catastrophic for employers. That is, unless our lawmakers pass a bill to change this law in the upcoming legislative sessions.
What does this mean for you in 2021?
Without a legislative change, employers like you will see a huge increase in tax liability that slows business recovery and creates disincentives to hire employees. Today, employers pay an average of $1,200 per full time employee. If SUTA rates increase to schedule H, these taxes will increase by more than $1,400, to an average of almost $2,600 per full time employee.
At ProService, we are sounding the alarm. We believe this steep increase in taxes cannot be placed on our business community after the year we have all suffered. To the contrary we need assistance! Businesses don’t have the pricing power to push through these costs, and in their weakened state, many more employers will die, which will slow our recovery further. Hawaii’s economy will be dramatically harmed by this at the worst possible time. We have to work to stop this, and we will need your help.
What are we doing? How can you help us advocate for you?
During the last few months, ProService has worked with the Governor’s administration and lawmakers to advocate for much more moderate SUTA rate increases than those mandated. We don’t believe it's likely to completely avoid any increase, so we are working to shrink the increase and spread the increases over future years.
During the Great Recession, we were successful at working with the State, helping achieve 2010 legislation that lowered the SUTA rate increases and spread them out, allowing businesses time to recover. We are working towards a similar goal this time, as the circumstances for business are even worse today than they were then. Hawaii businesses need continued relief and support from our government. We will do all we can, and we need your help too!
We need your help. Can we count on you?
While ProService has taken a seat at the table and been heard by the administration, we need your help. We need your voice. There is no guarantee our lawmakers will take action to lower SUTA taxes next year unless they hear loudly and clearly from all of you. The State of Hawaii will need to hear from you. The greater the movement, the greater the result.
So can we count on your help? Will you lend your voice? If yes, please let us know HERE we will stay in touch with you to get your assistance as this issue comes to the fore in the weeks ahead.
Second, please share this email with your ohana and your business colleagues. It seems like no one knows of this yet. We need the word to get out!
Third, you can start now. You can call and email your State Representatives and Senators. We don’t have templates yet, but you can let them know this is a major problem for your business, and you are counting on them to find a solution.
President & CEO