Illinois' lingering unemployment debt could hurt employers, workers

[October 28, 2022]  By Andrew Hensel | The Center Square

(The Center Square) – Illinois has more than a billion dollars of unemployment trust fund debt that lingers. Left unpaid, some worry things could get worse for employers and employees.

The Bureau of Labor Statistics released updated unemployment numbers for the 50 states. Behind only Washington D.C., Illinois finished 50th on the list and had an unemployment rate of 4.5%, which is unchanged from last month and still above pre-pandemic levels.

Illinois also is among only four states that still need to pay outstanding state unemployment trust fund debt, with $1.3 billion still left to be paid carrying interest for taxpayers. If not addressed by Nov. 10, the state could have its Federal Unemployment Tax Act credit reduced by 0.3% for each year, according to a letter from members of the U.S. Congress to Gov. J.B. Pritzker.

State Rep. Dan Ugaste, R-Geneva, said if not paid down, workers in Illinois will be hit with the consequences.

"It is accruing interest, and we have yet to pay it down," Ugaste told The Center Square. "If we get to Nov. 10 and it's not paid, employers throughout the state are going to be hit with higher taxes."

Chris Davis, Illinois state director of the National Federation of Independent Businesses, said the failure to pay could result in Illinois' unemployment problem getting worse.

"This absolutely affects an employer's decision to hire any new employees," Davis told The Center Square. "These are payroll taxes. It affects the wages that are paid to workers."

Illinois had around $4.5 billion in unemployment debt accumulated during the economic restrictions put in place during the COVID-19 pandemic.

Ugaste said the state mishandled the use of federal funding during the pandemic and could have avoided this problem altogether.

"$2.7 billion of [American Rescue Plan Act] money was used to pay a portion of the debt. Unfortunately, we did not pay down all the debt," Ugaste said. "At that time, we had the money. When we received the money and realized we could use it to pay down the debt, Republicans called the Democrats and told them we need to use it to pay down the debt."

Andrew Hensel has years of experience as a reporter and pre-game host for the Joliet Slammers, and as a producer for the Windy City Bulls. A graduate of Iowa Wesleyan University and Illinois Media School, Andrew lives in the south suburbs of Chicago.