Minn. employers to pay less into jobless fund

Employers in Minnesota will pay less into the state's unemployment insurance trust fund next year.

Minnesota's unemployment insurance trust fund went into deficit during the Great Recession as thousands of workers lost jobs. That prompted state officials to require employers to pay more into the fund.

Employers pay a base tax rate of .5 percent on the first $29,000 of annual wages per employee. But now that Minnesota's job market has improved dramatically, the trust fund is once again robust. Starting Jan. 1, that base rate will drop to .1 percent.

As a result, businesses will save nearly $350 million over the next two years, according to the Minnesota Department of Employment and Economic Development.

Ravi Norman, chief executive of Thor Construction in Fridley, said his company will save about $500 per employee annually.

"This is important because in the construction industry, which has a high volume of seasonal workers, we've been hit disproportionally hard a lot of times with the unemployment tax," Norman said. "So the ability to now have an unemployment insurance tax cut is really critical. And it allows us an opportunity to further a reinvestment in our people."

The fund is expected to exceed $1.2 billion over the next two years. State officials say that's well above the level required for reducing the tax rate.