LINCOLN — An improving but not fully recovered economy will translate into a significant drop in unemployment insurance rates for Nebraska and Iowa businesses in 2013.
In Nebraska, employers will be paying 32 percent less, on average, for unemployment insurance in 2013 than they did in 2012.
In Iowa, costs will fall an average of 17 percent.
Employers are getting a break because of a drop in unemployment insurance claims coupled with an increase in the balance of the state trust fund that pays out claims, said Cathy Lang, Nebraska's state labor commissioner.
Unemployment insurance works like other types of insurance — if an employer has more claims, it pays higher premiums. Overall premiums are based on the balance in a state's trust fund and the claims being made. Rates rise to compensate for high claims and a low balance in the trust fund. When the holdings in the trust fund are high enough to cover anticipated claims, rates drop.
Unemployment claims in Nebraska peaked at $5.6 million a week in late February 2010 but have dropped to about $2 million a week in recent weeks.
The state's unemployment insurance trust fund dropped from $283 million in August 2008 to a low of $124 million in March 2010. That balance had recovered to $369 million as of Sept. 30.
Business owners saw a 65 percent increase in unemployment insurance rates in 2010 to help rebuild the fund. The state then accepted $43 million in federal stimulus funds. That avoided a rate increase in 2011. Rates fell 25 percent this year.
Iowa has seen a similar rebound, said Kerry Koonce, a spokeswoman for Iowa Workforce Development. Iowa's unemployment insurance trust fund fell to a low of $153 million during the recession, but now stands at $744 million.
Iowa was granted $83 million in federal stimulus funds to bolster its unemployment insurance fund.
Lang said that while unemployment claims are now running at less than half of what they did during the peak of the recession, it may mean that many people have returned to the workforce at lower-paying or part-time jobs.
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