S.C. will not raise unemployment taxes for businesses despite pandemic

VIDEO: S.C. will not raise unemployment taxes for businesses despite pandemic

COLUMBIA, S.C. (WCSC) - South Carolina Gov. Henry McMaster said businesses will not face an unemployment tax increase despite the amount of money the state has payed out in unemployment benefits.

LIVE: Gov. McMaster to make an announcement regarding unemployment tax rate in S.C. >>https://bit.ly/3lqUHrR

Posted by WIS TV on Thursday, November 12, 2020

McMaster announced the unemployment tax rate freeze at 2020 levels Thursday from the Statehouse in Columbia, along with South Carolina Department of Employment and Workforce Executive Director Dan Ellzey and members of the state legislature.

“That is a major accomplishment. And it credit goes to accelerateSC as well as the people you see here today,” McMaster said. "We were very careful when the CARES Act money came in our General Assembly. Listening to accelerateSC that group, their recommendations and discussing and making strong decisions, we determined that of the $1.9 billion, $920 million should go to the unemployment trust fund.

That fund is normally filled by unemployment tax revenue businesses pay.

McMaster said the state handled the pandemic carefully compared to other states.

“We took a, a different approach and determined which activities, which kinds of businesses, which locations would be the ones where people would congregate and would be most likely to spread the virus, such as barbershops and beauty parlors, some retail stores where items are picked up and touched by others all day long,” he said. “And that is what we limited.”

He called the state’s response a “measured approach.”

“But we went in and then we came out sooner than others did around the country and as a result of that, and unemployment rate is 5.1%, New York, for example, for comparison, is 9.7%. California is 11%.”

McMaster invoked the 2006 adventure film Poseidon, about a huge tidal wave that capsizes a luxury liner, as an example of the state’s battle against the pandemic.

“Here came the big wave and the ship wasn’t quite ready, and it couldn’t quite turn into the wave to avoid getting flipped,” he said. “Well, that’s what happened here with this tsunami. We call it COVID-19.”

But McMaster said unlike other states he compared to a ship being flipped, South Carolina is beginning to come out the other side and said the “future looks good.”

Ellzey said the year began as “extremely promising” with a 2.5% unemployment rate in February.

“Two months later, the bottom had been pulled out from under us and everything turned around,” Ellzey said. “The unemployment rate was up to 12.8%, the number of jobs were down to 2.07 million and the number of unemployed had gone from 59,000 to 303,000.”

He said some sectors, particularly the hospitality and food services industries, had it even worse.

“Many of us lived through the 2009-2009 recession and we all heard the economists say back then, ‘This is it, it can’t get any worse than this unless we go into a new depression,’” Ellzey said. “Well, if you looked at the month of February and March in South Carolina, and the U.S. and compared it to 2008 and 2009, you would say that the Great Recession was pretty mild compared to what we had just gone through.”

The SCDEW told lawmakers that the state’s Unemployment Insurance Trust Fund contained $1.1 billion before the COVID-19 pandemic. But by June, that total had dropped to $685.5 million. Their projections then showed the trust fund would run out of money by the end of the year.

South Carolina has paid out more than $1 billion in unemployment aid since March.

The most recent update to South Carolina’s unemployment rate showed a 5.1% unemployment rate in September. Economists for the state don’t expect employment rates to return to where they were in February until 2022.

The news comes as the state announced a small increase in new initial unemployment claims in the week ending Saturday.

Since mid-March, the state has paid out more than $4.5 billion in a combination of state and federal unemployment benefits to people who lost their jobs during the pandemic.

Copyright 2020 WCSC. The Associated Press contributed to this report. All rights reserved.