What effect will the increased minimum wage have on the unemployment insurance program?
Does CBO expect that state unemployment payroll taxes will need to be increased or that unemployment benefit payments will increase as a result of any unemployment resulting from the increase in the minimum wage? Answer. CBO estimates that increases in the minimum wage would have a negligible effect on the unemployment insurance (UI) program. Unemployment benefits might rise slightly from any increase in unemployment that might ensue, but only a very small share of minimum-wage workers end up qualifying for benefits. Initially, taxes under the program could rise or fall depending on what happened to earnings under the annual cap on taxable wages. Moreover, to the extent that the balances in the state UI accounts deviated from a state’s desired position, the state would adjust its tax rates and benefit provisions to offset those deviations, CBO assumes. Thus, CBO expects the net effect on the UI program to be neutral over time.
Related Questions
- If the Federal minimum wage is subsequently increased above the state minimum wage, when would the automatic increase to remain $1.00 above the Federal wage be implemented?
- I subscribe to BNAs Payroll Library on the Web, how do I find out the taxable wage limit for unemployment insurance in a particular state?
- What Happens If The Federal Minimum Wage Is Increased?
