OLYMPIA, June 19.—New figures from the state Employment Security Department indicate Washington’s average annual wage increased by 3.6 percent last year, triggering calculations that will increase unemployment insurance taxes and also may increase taxes next year for worker’s compensation.
Exactly how much is a matter that will be determined in months ahead as ESD and the Department of Labor and Industries consider tax rates for the coming year. But because the average annual wage is a factor in actuarial calculations that are used to establish both benefit levels and taxes, employers can steel themselves for some sort of a hike in 2013. The announcement calls attention to the fact that the calculations aren’t pegged to increases in the cost of living – the 3.6 percent increase actually outpaced inflation in the Seattle area by 0.9 percent, ESD noted.
Nor is it a measure of a median increase in wages, which would have produced a lower figure. Behind this year’s numbers, the department said, was a marked increase in the number of insured workers earning more than $75,000 – some 7.5 percent. “Month by month, we’ve been seeing strong growth in industries that tend to offer above-average pay, and that seems to be reflected in last year’s earnings,” said ESD Commissioner Paul Trause.
The average annual wage covered by unemployment insurance rose from $48,162 in 2010 to $49,894, according to the state Employment Security Department. The average weekly wage rose from $926 to $959.
The agency’s stats showed that the industries with the greatest wage growth in 2011 were the information sector, with wage growth of 9.5 percent; company management, which rose 7.9 percent, and manufacturing, which rose 5 percent.
Impacts Business Taxes
The annual calculation is more than just an academic exercise for businesses across the state. Benefits in the two big state insurance programs are tied to the growth in the average wage.
The minimum weekly unemployment benefit is calculated at 15 percent of the average weekly wage, and that will increase by $5 to $143, for new claims opened on or after July 1. The maximum weekly benefit is pegged at 63 percent of the average weekly wage. That will increase by $21 to $604.
The wage also is used to compute employers’ unemployment taxes. Starting in 2013, employers will pay taxes on the first $39,800 paid to each employee, up from $38,200 in 2012.
And where the state workers’ compensation program is concerned, the average wage is used to calculate a “cost-of-living allowance” for time-loss and pension benefits. Last year’s COLA was canceled as part of the sweeping reforms to the workers’ comp program adopted by the 2011 Legislature, but an increase is scheduled to take effect July 1 of this year. The adjustments will affect workers who have been receiving benefits more than a year.
Increased Employment
ESD’s figures show that the number of workers covered by unemployment insurance grew by 37,764 in 2011, and earnings grew by $6.6 billion. The previous year, the state lost nearly 32,000 jobs, and earnings grew only $1.2 billion. Yet that big job loss in 2010 also drove an increase in the average wage, because most of the positions that were lost were low-paying jobs. So last year the average wage rose 2.1 percent.
At present, about 18 percent of unemployment-insurance claims are paid the maximum, and 7 percent receive the minimum.
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