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Jan Norman on Small Business ~ News and practical tips for and by Orange County small business owners

Archive for the 'Employment Development Department' Tag

Businesses, city partner on $2 million job training

June 26th, 2009, 11:00 am by Jan Norman, small-business columnist

Santa Ana is seeking 70 to 100 local businesses to provide summer jobs for 400 young adults from low-income say-logofamilies under a program that has received $2 million in federal economic stimulus money.

The Greater Santa Ana Business Alliance and Santa Ana Community Development Agency are teaming with the state Employment Development Department for the Santa Ana Youth Employment Program, or SAY for short

The City has committed money from the American Recovery and Reinvestment Act to the project intended to give work experience, mentoring and workplace skills training his summer, according to Mayor Miguel Pulido.

The Santa Ana Youth Employment Program started 10 years ago. This year’s $2 million allocation is the largest funding for summer youth employment since the mid-1990s, said Sandy Barba, of the Santa Ana WORK Center, which oversees the program.

Interested business owners can call Sylvia Vazquez at 714-647-6569. Young adults interested in jobs can call 714-565-2655 or click here to download a job application.

Other jobs stories…

Posted in: Jobs • Meltdown • Top posts • • • | Post a Comment »

State must borrow to continue unemployment checks

January 27th, 2009, 11:46 am by Jan Norman, small-business columnist

California Unemployment Insurance Fund has run out of money and must borrow from the federal government in order to continue paying benefits to the jobless, according to the Employment Development Department.

The fund will need an extra $2.4 billion this year, and the shortfall will grow to $4.9 billion in 2010, the EDD said.

The unemployment insurance is paid by employers through payroll taxes. They are already paying the maximum allowed by law. The state must repay the federal loan out of the general fund, not from the Unemployment Insurance Fund.

“If the state is unable to pay back the loan’s principal by Sept. 30, we will owe $20 million in interest and if nothing is done by 2010, we will an additional $133 million in interest,” says EDD spokeswoman Loree Levy.

Lack of payment could also jeopardize the tax credit that employers get for their payments into the federal unemployment fund.

In 2004, the only other time the state borrowed from the federal government, it was able to repay the money before owing any interest. Officials don’t expect to be able to meet that deadline this year.

To keep the fund solvent, Gov. Schwarzenegger has proposed increasing the unemployment insurance tax $56 to $416 per employee per year - which would require a 2/3 vote of the legislature - and cutting benefits $1 to $44 a week perperson. The cuts would affect about a third of recipients.

Unemployed workers are eligible for payments of as much as $450 a week for up to 59 weeks.

The Unemployment Insurance fund is being drained by the rapid rise in unemployment, which hit 9.3% statewide in December. The fund is paying out $30 million to $34 million a day. It issued $1.1 billion in assistance checks to 429,000 unemployed workers in December.

In 2008, the state paid $6.8 billion in regular unemployment pay and $1 billion in federal extensions. By comparison, in 2007 it paid $4.9 billion.

More economy stories…

Posted in: Economy • Jobs • Meltdown • Top posts • • | 64 Comments »

O.C. yearlong job loss second highest in U.S.

November 5th, 2008, 6:00 am by Jan Norman, small-business columnist

Orange County’s job loss in the past year was second highest among U.S. metropolitan divisions, according to preliminary data from the Bureau of Labor Statistics and California Employment Development Department.

And two private jobs reports for October released today paint a continuing gloomy picture.

The BLS report, not seasonally adjusted, says the county lost 29,600 jobs September to September. Only Detroit lost more, shedding 33,800 jobs. Los Angeles County was fourth, losing 23,600 jobs.

The county’s unemployment rate in September was 5.7%, compared to 4.2% in September 2007.

California’s September rate was 7.7% and the U.S. rate was 6.1%

O.C.’s September rate is actually lower than it was in August when the county’s unemployment was 5.9% (that rate has been adjusted upward from 5.8% EDD reported in September). Click here to read that earlier story.

Two out of three private jobs reports for October indicate a deteriorating jobs picture.

Automatic Data Processing Inc., the world’s largest payroll and benefits administrator, reports that U.S. private employers cut 157,000 jobs in October. This report is drawn from actual payroll activity of ADP’s 500,000 U.S. customers that have 22 million workers.

In recent months, small businesses have continued to add more jobs than mid-sized and large companies shed. But in October, all three sectors trimmed payrolls:

  • Businesses with fewer than 50 employees: - 25,000
  • Businesses with 50 to 499 employees: - 91,000
  • Businesses with 500+ employees: - 41,000

Click here to read ADP’s Small Business report.

Challenger, Gray & Christmas Inc., a Chicago-based outplacement company, reports today that announced job cuts at U.S. companies hit a five-year high in October. The 112,884 layoffs were 19% higher than in September and 79% higher than a year earlier.

“It is also an ominous sign that job cuts reached a five-year high in October. Year-end job cuts are typically higher at other times of the year, but the fact that October was significantly higher than recent years suggests that companies not only have been hit hard by this downturn, but they do not see a rebound anytime in the near future,” said John Challenger.

The top reasons companies gave Challenger for the October job cuts:

  • Market conditions
  • Restructuring
  • Demand downturn
  • Closing the business
  • Cost-cutting
  • Fluctuating sales
  • Merger/acquisition
  • Reorganization/consolidation
  • Order cancellation/reduction
  • Competition

The one positive report that may be a ray of hope or an outlier that doesn’t reflect reality comes from SurePayroll, the largest online payroll service used by thousands of smaller companies. In October, California small businesses added employees and the average paycheck for 2008 to date, SurePayroll data shows.

Small businesses account for about half of our jobs. Here’s SurePayroll’s finding of job creation in key states:

However, the BLS September news was particularly glum for Riverside-San Bernardino, which had the highest unemployment rate — 9.1% — among the 49 metro areas with at least 1 million population.

Southern California isn’t alone in job losses over the past year. The BLS said unemployment rates rose in 349 of the nation’s 369 metro areas.

Click here to read the full BLS report. Click here for EDD’s press release.

More economic news….

Posted in: Jobs • Meltdown • Reports • Top posts • • • | 12 Comments »

Fund for jobless pay down 45% since May

November 4th, 2008, 6:01 am by Jan Norman, small-business columnist

California’s fund that pays unemployment benefits is projected to have by the end of the year 45% less money than projected in May when the problem was considered dire.

Click here to read that earlier story.

The Unemployment Insurance Fund will have an estimated $600 million on Dec. 31, according to the new update. In May, the fund was projected to have $1.1 billion, which the federal government considered “dangerously low.”

It had a $2.7 billion surplus at the end of 2007.

The state is paying out between $25 million and $27 million every day in unemployment benefits, said Loree Levy, spokeswoman for the Employment Development Department.

At this rate, the fund will be $2.4 billion in the hole by the end of 2009 and run a $15.2 billion three-year deficit by 2010 with payments exceeding employer contributions by $7.2 billion, the EDD said.

Here is the UI Fund balance 2007 - 2010:

Register graphic by Molly Zisk

Register graphic by Molly Zisk

The fund is running dry much faster than expected even a few months earlier because more than 1.2 million Californians are unemployed, 10% higher than projected in May, the EDD said. And that was using stats from June.

“Unemployment is higher than anyone anticipated,” Levy said. “We projected 6.5% and we’re already at 7.7%.”

Gov. Schwarzenegger said in a statement that he will ask the Legislature to include a fix for the UI Fund in a special session he will call right after the elections to deal with the state’s growing financial crisis.

“The system was already struggling due to 20 years of increasing benefits with virtually no attention paid to the sytem’s funding,” he said.

The state’s employers are already paying the highest allowable by law. However, their rate is among the lowest nationwide.

The solution probably will be a hike in that tax and perhaps tightening of eligibility requirements and/or reduction in benefits, Levy said.

That may not come in time to avoid having to borrow from the federal government to keep benefits flowing, as the state did when the fund went bankrupt in 2004.

However, the loan cannot be paid out of the UI Fund but must come from the state’s general fund.

“If the state is unable to pay back the (loan’s) principal by September 2009, it will owe $20 million in interest and if nothing is done by 2010, we would face $133 million in interest,” Levy said.

That could also cause employers to lose their tax credit for their payments into the UI Fund.

Click here to read the EDD’s entire Oct. 31 forecast.

More economic meltdown news….

Other stories…

Posted in: Economy • Jobs • Reports • Taxes • Top posts • Updates • • | 22 Comments »

Fund for jobless pay running out of money

August 11th, 2008, 5:00 am by Jan Norman, small-business columnist

California’s fund that pays unemployment benefits will go bankrupt by the end of 2009 if the sluggish economy and higher benefits without reform continue, according to the state Employment Development Department.

A likely solution could end up costing employers their tax credit for payments into the state Unemployment Insurance (UI) Fund.

The EDD’s annual Unemployment Insurance Fund Forecast (Acrobat Reader required) projects that the UI Fund balance that was $2.4 billion at the end of 2007 will be cut in half to $1.1 billion by the end of 2008.

The fund will barely escape bankruptcy in the first quarter, but will exceed total tax receipts by $2.7 billion by the end of 2009. Here’s the EDD’s chart:

ui-chart.gif
“These estimated balances could change depending upon actual employment levels and claims filed,” the EDD forecast said.

Those numbers depend on the accuracy of EDD’s projection of the number of unemployed California workers receiving payments from the UI fund. Here are EDD’s numbers of people drawing unemployment:

  • 2006: 873,000
  • 2007: 968,000
  • 2008: 1,108,000
  • 2009: 1,122,000

A little worsening of the state’s economy could easily increase the 2008 and 2009 numbers. An economic boom would decrease them.

 The UI fund went bankrupt in 2004, says the California Chamber of Commerce. The cause, then as now, is that the economy went south right after the legislature in 2001 approved a 95% increase in benefits without making any reforms in the program.

That benefit increase, implemented over three years, cut the UI fund’s surplus from $6 billion to $397,000.

The state only avoided wiping out the fund entirely by taking an emergency loan — for the first time in history — of $1.4 billion from the federal government plus increasing employers’ tax to the highest allowable by law: an “F” level plus 15%.

Those federal loans cannot be repaid from the UI Fund. They must be repaid from the state’s general fund, but this time repayment is problematic because the state is $15 billion in the red already.

If the state in 2009 borrows from the federal government to cover unemployment checks, it could impact employers’  tax credit for payments to the UI Fund, EDD said. After two years, the tax per employee would increase 37.5% and after four years, the tax would be $119 per employee compared to a $56 maximum now.

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Posted in: Economy • Jobs • Top posts • • • • | 9 Comments »
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