The Charles River Regional Chamber, along with the nine other chambers of commerce that are members of the Massachusetts Chambers Policy Network, sent the following letter to Gov. Healey, Secretary Jones, Speaker Mariano and Senate President Spilka on Feb. 5, 2025.

Our letter underscores our ongoing concerns about the condition of the Commonwealth’s Unemployment Insurance (UI) system. While we appreciate the recent efforts of the Healey/Driscoll Administration to reach a settlement with the federal government regarding the previous Administration’s $2.5 billion UI error, we remain worried about the additional costs to employers who are still paying COVID assessments and facing significant rate schedule increases in the coming years. 

Therefore, we urge the Administration and the Legislature to work together to find the necessary funds within the Commonwealth’s budget and/or Rainy Day Fund to address this settlement debt, implement reforms to lower the costs of the UI system, and avoid policies that exacerbate the already heavy burden on employers. 

Full text of letter

Feb. 5, 2025

Dear Governor Healey, Secretary Jones, Speaker Mariano, and Senate President Spilka, 

On behalf of the Massachusets Chambers Policy Network, we write to highlight our ongoing concerns with the condi􀆟on of the Commonwealth’s Unemployment Insurance (UI) system. We greatly appreciate the recent efforts of the Healey/Driscoll Administra􀆟on to reach a setlement with the federal government regarding the previous Administra􀆟on’s $2.5 billion error that improperly u􀆟lized federal funds for state unemployment benefits during the pandemic. However, the combina􀆟on of increasingly high costs on employers, including those imposed by the $2.1 billion setlement, and the impending insolvency of the Unemployment Insurance Trust Fund, raise serious ques􀆟ons about the system’s long-term stability, the impacts on employers, and their ability to hire and retain talent in the Commonwealth. Therefore, we urge the Administra􀆟on and the Legislature, in partnership, to find the necessary funds within the Commonwealth’s budget and/or Rainy Day Fund to pay this setlement debt. 

As Chambers of Commerce from across the Commonwealth stretching from the Cape to the Berkshires, the Massachusets Chambers Policy Network (the Network) priori􀆟zes public policies that advance the compe􀆟􀆟veness of our local businesses and workforce. The Network appreciates the leadership of the Governor and Legislature for focusing on a strong and stable economic environment in recent legisla􀆟ve accomplishments such as comprehensive tax reform, the Mass Leads Act, and the Affordable Homes Act. 

It is with this leadership in mind that we raise the issue of our UI system that has significant impacts on our employers and makes it more expensive to hire employees and do business in the Commonwealth than other states. The system must be reformed to address rapidly increasing costs and a lack of accountability regarding increasing levels of benefits and ongoing struggles with fraud and waste. 

 $2.1 billion in extra costs to employers 

The Network commends the Healey Administra􀆟on for its advocacy with the Department of Labor to resolve a problem it did not create. The result is likely the best the Commonwealth could hope for: the repayment of $2.1 billion to the federal government spread over the next 10 years, a waiver of substan􀆟al interest payments owed and penal􀆟es imposed, and a pledge to pay the interest accrued on the outstanding debt through the General Fund equaling $73 million. 

However, the result will add roughly $203 million a year in added costs onto employers beginning on December 1, 2025, hi􀆫ng employers through the UI rate schedule likely in 2026. These are costs that could have been offset by other funds available to the Commonwealth during and a􀅌er the pandemic but now will be borne by businesses unless ac􀆟on is taken by the Legislature and Governor. 

We acknowledge and understand that this problem is not the fault of the current Administra􀆟on or the Legislature. In fact, the Legislature took pains to mi􀆟gate the strain imposed on the UI system during the pandemic years by dedica􀆟ng resources and authorizing borrowing to keep the system from collapse while offse􀆫ng some of the immediate costs on employers. 

However, employers also share no fault for a $2.5 billion error, pandemic shutdowns, and the resul􀆟ng strain on the UI system. The lingering impacts are maters of broad public policy, and the Commonwealth should play a role in offse􀆫ng these costs to employers. Thankfully due to the Administra􀆟on’s nego􀆟a􀆟ons, the Commonwealth could absorb the burden of the error without dras􀆟c changes to the budget or significant withdrawals from rainy day funds. We urge the Administra􀆟on and the Legislature, in partnership, to find the necessary funds totaling less than $300 million a year within a $62 billion budget to keep UI costs down for employers. 

A System in Need of Reform 

According to the Execu􀆟ve Office of Labor and Workforce Development, the UI Trust Fund is likely to become insolvent in 20281, even without this added burden. Despite having the 6th highest UI Trust Fund in the country as of September 20242, the Commonwealth is ranked 47th in its UI tax burden in 2025.3 This places Massachusets at a significant disadvantage with its compe􀆟tor states. Addi􀆟onally, employers are s􀆟ll paying an annual COVID-19 assessment, totaling an es􀆟mated $349 million in 2025 and likely remaining above $300 million a year through 2028.4 To keep the UI Trust Fund solvent, the predicted rate schedule, and associated higher costs, will jump from Schedule D to Schedule F in 2026, not factoring in either the COVID assessment, and now, the $203 million repayment due to the federal government. 

Policy changes have exacerbated these impacts on employers. The maximum weekly benefits amount now equals $1,051 in the Commonwealth, the second highest in the country behind only Washington.5 Massachusets also offers an addi􀆟onal weekly dependency allowance of $25 per dependent. While these policy choices may be well inten􀆟oned, their impacts on the UI Trust Fund, and ul􀆟mately on increasing the UI taxes on employers, are rarely analyzed. Now is the 􀆟me to consider the cost burden on businesses, and their impact on job growth and the economy overall. 

We thank Governor Healey, Secretary Jones, and Secretary Gorzkowicz for beginning their review of the solvency of the UI system and assessment of poten􀆟al reforms. As you conduct your review, the business community stands ready to assist in evalua􀆟ng possible cost-saving reforms, increased accountability and transparency, and efforts to reduce waste and fraud within the system. However, we cau􀆟on policymakers against imposing even more dras􀆟c cost increases on employers as they navigate more costly rate schedules and COVID assessments. Policy proposals such as increasing the $15,000 wage base would add even more disincen􀆟ves to hire employees in the Commonwealth. 

In conclusion, while we appreciate the Administra􀆟on’s and the Legislature’s efforts to navigate complicated and costly circumstances around our UI system, employers ul􀆟mately shoulder the burden of paying higher UI tax rates. While we accept that responsibility, the high cost of our current system hurts our compe􀆟􀆟veness and job growth. We urge policymakers to avoid passing on costs to employers who played no role in the $2.5 billion systemic error under the previous Administra􀆟on, and to take a serious look at necessary reforms to mi􀆟gate an unsustainable and costly UI system. We stand ready to partner with you at the appropriate 􀆟me. 

Sincerely, 

Massachusetts Chambers Policy Network 

James E. Rooney, President & CEO, Greater Boston Chamber of Commerce 

Tim Murray, President & CEO, Worcester Regional Chamber of Commerce 

Rick Sullivan, President & CEO, Western MA Economic Development Council 

Karen Andreas, President & CEO, North Shore Chamber of Commerce 

Tim Cahill, President & CEO, South Shore Chamber of Commerce 

Greg Reibman, President & CEO, Charles River Regional Chamber 

Michael O’Sullivan CEO, One SouthCoast Chamber 

Jonathan Butler, President & CEO, 1Berkshire 

Paul Niedzwiecki, President & CEO, Cape Cod Chamber of Commerce 

Diana Szynal, President, Springfield Regional Chamber