Oregon's 2021 Projected Unemployment Insurance Tax Collections Up 34%/$269+ Million to $1.065 Billion.

The Oregon Employment Department issued notices in November to employers with 2021 changes in the unemployment insurance rates that they pay for their employees. 

Individual employers will pay different rates based on prior claims experience, but on average the rate will move from 1.94% of taxable payroll to 2.26% of taxable payroll. The taxable base wage will increase from $42,100 in 2020 to $43,800 in 2021. 

Estimated Unemployment Tax Collections in 2021 Projected to Increase by 34%/$269 Million.

OED has also advised me that their projection is that total taxable payroll will be $47,130,000,000 in 2021, vs a projected $47,609,418,000 in 2020 (2020 data is from ETA report 204). 

Using the average tax rates from above this would mean projected tax collections of $1,065,138,000 in 2021 vs $795,123,000 in 2020. That's a one year increase of 34%/ $269.215 Million. 

2011-2021 Graph of Historical UI Tax Rates and Taxes

To provide some historical context I prepared the graph pasted below that shows for 2011-2021 the average tax rate (calculated on both taxable payroll and total payroll) and the estimated employer contributions, as found in the ETA 204 report (with 2021 data from OED). No inflation adjustments have been made.

2021 Is Only The Start of  Annual Unemployment Tax Increases

The 2021 UI tax increase would have been higher except that many benefits were 100% paid this year by the federal government and calculation of UI taxes for 2021 only uses a portion of the 2020 period when benefits spiked. 

Also, as my prior post HERE noted, the projected unemployment trust fund is projected to decrease by more than $4.3 billion from March 2020 to March 2024. 

This likely means that future years will require additional tax increases, a pattern that occurred after the last great recession in 2010.  

Important: The increase in UI taxes is not a bug, it is a feature of the system. 

UI tax changes, up or down, keep the UI fund self sufficient and solvent and avoid borrowing costs to shore up the fund or a diversion of CARES act funding that is occurring in other states. 

Note also that these are projections, which can change as new data becomes available and may differ from actual collections.  

Originally created and posted on the Oregon Housing Blog.