Recession fears invigorate debate over unemployment rate freeze

[Omaha Steve]

http://www.bostonherald.com/business/general/view.bg?articleid=1074151

By Associated Press
Sunday, February 17, 2008

Fears of a recession are heating up the debate as state lawmakers offer to aid Massachusetts businesses that face steep unemployment insurance rates.

The Legislature and Gov. Deval Patrick are poised to forego a scheduled annual rate increase in favor of freezing rates at their current level for another year — a move that would prevent businesses from being saddled with $153 million in higher costs to cover the state’s unusually generous jobless benefits.

Supporters say the relief comes at a time when Massachusetts must do more to ease burdens on businesses amid a national economic downturn that threatens to slide into recession.

"Where is the money put to better use? Running around in the economy, or staying parked in the unemployment insurance trust fund?" said John Reagan, executive vice president of government affairs for Associated Industries of Massachusetts, a business group. "It’s better in the economy, where it can be used to pay wages and make capital investments."

But labor leaders and an economist say the rate freeze couldn’t be more ill-timed. Unless a feared recession fails to materialize, job losses will likely grow, leading more workers to draw unemployment benefits and potentially drain the trust fund’s current $1.2 billion balance.

The balance last fell below zero in 2003 and 2004, following a recession that hit Massachusetts harder than most other states, and has left the state with about 100,000 fewer jobs than it had at its historic employment peak in 2001.

FULL story at link.