ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, January 30, 1997 TAG: 9701300018
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: MIKE HUDSON STAFF WRITER
ALTHOUGH MARK GIVENS would welcome a cut in the unemployment tax, his main concern is the rules that govern how employers' rates are determined.
Mark Givens, a cattle and sheep farmer in Giles County, runs a side business mowing weeds along state highways.
He usually has two or three employees. As for management, he's it: CEO, personnel director and finance officer all in one.
As a small businessman, he says the state's unemployment tax is costly for him - both in terms of dollars paid and in time spent dealing with it.
In the fall of 1993, he hired a man and paid him $1,920 for 40 days' work. It's seasonal work, and once it was done, Givens said he had to let him go.
The man applied for unemployment benefits and received $4,149 over several months from the Virginia Employment Commission.
Givens won't have to reimburse the state directly. But he figures he'll pay that much back over the next few years, thanks to an increase in his unemployment tax rate - from 2.57 percent to 6.23 percent of his payroll.
Each employer's rate is based on its history of layoffs. To be eligible for benefits, workers must lose their jobs through no fault of their own. Givens took the boost in his tax rate because Virginia law says the history of benefit payouts must be assessed against a worker's most recent employer for whom he or she worked at least 30 days.
For Givens, the rule is an example of how the unemployment compensation system works against small and seasonal employers.
"That's not the way things should be," he said.
Virginia's jobless benefits system has come under scrutiny recently in the wake of Gov. George Allen's efforts to cut unemployment taxes on businesses, saying that in an expanding economy, the compensation fund has grown to almost $900 million. Under his plan - which passed the Senate's Commerce and Labor Committee on Monday - Virginia companies would get a break totaling nearly $200million over the next six years.
Labor officials say Allen should scale back his tax cut and use some of the money to expand the safety net for people who lose their jobs.
These critics say Virginia's unemployment taxes are low enough already. According to federal figures, Virginia businesses' unemployment taxes amounted to 0.45 percent of wages paid in 1995 - the 47th lowest among U.S. states.
"The employers hardly pay any taxes in this state as it is," Virginia AFL-CIO President Danny LeBlanc said. "We're not convinced a tax reduction is good business for Virginia. Because you've got to have money in the trust fund for when times get bad."
The Wall Street Journal this week reported that the move by Virginia and six other Southern states to cut unemployment taxes is "politically attractive, but potentially risky." The report said economists worry that these states' leaders "have forgotten how quickly a downturn can occur and thus are setting their states up for a fall."
But supporters of Virginia's tax cut say Allen's plan would boost the economy without endangering worker protections.
"Even a savings of a few hundred dollars per year can be significant for a small business," said John Broadway, director of the Virginia chapter of the National Federation of Independent Business. "It can buy a new fax machine or copier, more advertising, or otherwise be used to invest in helping a small business grow."
Mark Givens would welcome a cut. But his main concern is the rules that govern how employers' rates are determined.
He wrote Allen to complain about the 30-day rule, and got a letter back from a governor's aide several weeks later. Givens didn't think the letter said much, although it let him know that state Sen. Steve Newman, R-Lynchburg, had introduced a bill that would require that benefits payout history be assessed against the last employer of at least 90 days. The Senate Commerce and Labor Committee voted Wednesday to hold the bill for another year.
Givens also contacted members of the state's Small Business Commission. Givens believes small businesses don't always get the advantages of bigger ones, which he notes often enjoy tax breaks and other government incentives.
Roanoke County's Lionberger Construction is not large by many measures of Virginia industry - it averages about 50 employees - but it's big compared with Givens' modest mowing operation.
Lionberger executives say the impact of the unemployment tax on them is relatively limited. But that's only because they work hard to keep it low by trying to maintain a stable work force - avoiding wholesale hirings or layoffs.
"It's a tax that can flip up on you very easily in our industry," accounting director Rindy Lionberger said. "It's a very difficult job to stay on top of, because the amount of work ebbs and flows at each job site."
For example, an ice storm in the winter of 1995 idled so many Lionberger workers that the state paid out $22,000 in jobless benefits to them in a single quarter. Most quarters, though, Rindy Lionberger said, the figure is perhaps a tenth of that.
Givens, who also must deal with such seasonal ebbs and flows, says he's not challenging the existence of the unemployment compensation system. He doesn't want people to think he's against workers.
"I brag on my employees," he says.
Still, he suspects some people out there abuse unemployment compensation.
"I imagine probably people's best employees don't even draw unemployment. They want to go back to work," he said. Still, he says, "there's times they feel like they've got to have that cushion."
LENGTH: Long : 102 lines ILLUSTRATION: PHOTO: GENE DALTON STAFF. Giles County farmer Mark Givens alsoby CNBruns a mowing business. When his workers are let go at the end of
the season, Givens can find that his unemployment tax rate soars.
color. GRAPHIC: Chart: 1995 unemployment taxes on businesses. KEYWORDS: MGR