State Chamber: Increasing cost to businesses must be done carefully

The Board of Economic Advisers has been meeting with other state officials and the business community to discuss how to rebuild the state’s Unemployment Trust Fund and repay funds borrowed from the federal government’s pool of unemployment loans.
Currently the board is looking at a recommendation that would repay $1 billion in loans, beginning the first of 2011, using a reduction in the federal credit against the state unemployment tax paid by businesses. It will take the state until 2019 to pay off just the borrowed money.
South Carolina Chamber President Otis Rawl says to generate an extra $400 million, as recommend to repay the federal loan and rebuild the trust fund, it could cost businesses another $140-$200 per employee.
Rawl says the business community is ready to step up and do what has to be done.  “But on the other side of it, we’re in pretty trying times right now.  From an economic development standpoint, we could loose any kind of initiative we have in this state.  If you increase too quick, you put jobs at risk.  We have to be careful about what we do.”
The state will also work toward rebuilding its Unemployment Trust Fund, which has been depleted during this year’s recession’s job losses. To approach the level of $1.1 billion in trust fund savings recommended by the federal government, in a period of 2.5 to 3 years, the panel may recommend increasing the employee wage base from $7000 up to the national median of $14,000, and putting a surcharge on unemployment compensation paid by all employers.
Rawl says currently South Carolina has one of the lowest business costs in the country. 
Rawl says the extra cost per employee would be on top of the existing $260 million in unemployment tax for two-million employees in South Carolina.  “My fear is that businesses doing a great job of managing their unemployment rate will be penalized as much as businesses that don’t do a very good job.  We should be rewarding the people who are not putting people on the streets.”
Rawl says the Boeing falling out of favor with the state of Washington is an example of what South Carolina does not want to have happen.  “Our concern is with companies like Boeing looking to locate here.  They’re experiencing large unemployment compensation payments and worker’s comp now, in Washington, and their governor is trying to do something.  If we go in that direction, that’s several thousand jobs coming to South Carolina that could be put in jeopardy if we don’t do this just right.”
Boeing is expected to choose a location for its new 787 jetliner facility by year’s end. Washington is home of the company’s commercial airplane division and the existing 787 assembly line, but is competing with South Carolina for the new project.  Among the incentives on the table in Washington, a multibillion-dollar tax and incentive package.  Now Boeing wants to reach a no-strike agreement with the state’s Machinists who waged an eight-week work stoppage last year.
South Carolina’s labor policies give unions less power than they have in Washington and workers at Boeing’s South Carolina facility have voted to oust the Machinists.