States that borrowed from the federal government to keep unemployment benefits flowing through the recession now have to start paying those loans back. Twenty seven states owe the federal government nearly $38 billion. The first interest payments on those loans were due last Friday and totaled about $1.1 billion.
Businesses pay two types of unemployment insurance taxes. A federal tax primarily covers the administrative cost of the program, and a state tax pays for the basic benefits that laid-off workers receive. In most of the states that borrowed from the federal government, the federal tax will increase by $21 per worker next year. Similar increases will take place in subsequent years until the loans are paid in full. Meanwhile, the state taxes have soared in just about every state to deal with the strain caused by the high numbers of people applying for unemployment benefits.
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