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House Republicans Raise Alarm Over Unemployment-related Costs, Call for Action to Help Main Street Businesses

Posted on September 9, 2021


HARTFORD—House Republicans this week warned that Connecticut’s business community will continue to face considerable challenges in the coming months, raising alarm that employers will soon be responsible for paying 50 percent of the extended unemployment benefits the state provides to out of work residents.

Those extended benefits amount to 13 weeks beyond the standard 26 weeks of unemployment benefits. They are provided when the state’s unemployment rate is at least 6.5 percent for the most recent three months, and at least 10 percent higher than it was for the same time three-month period over the past two calendar years. While the availability of these extended benefits pre-date the COVID-19 pandemic, the federal government has covered their cost during the pandemic. That ends Sept. 12, when businesses will begin paying half of the cost.

Republicans say the legislature and governor must put greater emphasis on issues tied to the heavy unemployment-related costs that will hamper Connecticut’s business community as it tries to recover.

“Employers are facing a perfect storm we fear could devastate the many main street businesses left hanging by a thread after enduring the first wave of the pandemic and the associated government shutdown,” House Republican Leader Vincent Candelora said. “We’re already seeing that their recovery will be even more difficult than anticipated due to the combined impact of inflation, staffing issues, supply chain problems, and a series of anti-business policy decisions from the legislature. With that reality in mind, it’s imperative that everyone serving in Hartford move economic issues to the top of their agenda.”

The business community’s responsibility for covering the extended 13 weeks of unemployment benefits comes as employers try to navigate the state’s new paid family leave program while also absorbing the impact of an increase to the state’s minimum wage. Soon, employers will be forced to contend with implementing a new state-run retirement savings program as well as cost increases driven by a new truck tax.

For months, Candelora and Republicans have insisted that Gov. Lamont and their Democrat colleagues use federal pandemic relief funds to pay back part of the more than $700 million the state has borrowed from the federal government to prop up Connecticut’s depleted Unemployment Insurance Trust Fund. That fund, which covers benefits for workers, is supported by unemployment taxes paid by businesses.

“Soon, Connecticut businesses will be burdened by both the cost of covering the extended benefits as well as increases to their unemployment taxes that are required to pay back the federal loan,” said state Rep. Harry Arora, House Ranking Member of the legislature’s Labor Committee. “After the great recession, Connecticut borrowed nearly $1 billion from the Federal Unemployment Account and it took our businesses five years to pay off that debt. This time, however, we’re in a unique position—we can, and should, do what many other states have done by easing that debt burden using federal pandemic aid.”

Back in early May, House Republicans proposed using $400 million in American Rescue Plan Act funds toward paying back the federal loan. So far, Gov. Lamont has set aside just $155 million.

“What the legislature and governor are doing now isn’t good enough, and we encourage our colleagues to take a fresh look at this issue and act immediately to take a considerable portion of our remaining ARPA funds and make life just a little bit easier for the people we need to power our economy,” Candelora and Arora said.