A robust economy paved the way for South Carolina to ease a tax paid by businesses. For the third year in a row, the state’s unemployment insurance (UI) tax rates will decrease or hold steady in 2024.
Gov. Henry McMaster (R) made the announcement earlier this month, saying there is no better time to be in business in the Palmetto State.
“The state’s leadership has worked hard to make strong financial decisions that maintain a healthy unemployment insurance trust fund which will benefit employers in the coming year,” said McMaster. “With a growing economy, a stable trust fund balance, and lower business tax, South Carolina proves once again that it is the ideal destination for business development and success.”
The South Carolina Department of Employment and Workforce (DEW), analyzes factors including the status of the UI Trust Fund, projected unemployment rates, and estimated revenue needed to pay benefits.
The latest review found the fund is fully solvent with a balance of nearly $1.6 billion. That allows DEW to set 2024 UI tax rates at the same level as the two previous years.
“Strong economic and wage growth have played a crucial role in maintaining our trust fund balance above the required threshold,” said DEW Executive Director, William Floyd. “Our unemployment rate has steadily declined and now matches the low 2.9% rate of February 2020. And we have a record number of people working in South Carolina with one of the fastest growing labor forces in the country.”
The 2024 rate will be lowered by an average of 6% for most businesses. The high trust fund balance will also eliminate a solvency surcharge.
While the rates for most classes will be lower, some businesses may be placed in a different category based on their level of UI claims. Notices were mailed to businesses, and employers can also log onto their account at the State Unemployment Insurance Tax System (SUITS) at https://www.dew.sc.gov/employers/unemployment-tax-information to see their 2024 rate.
Businesses are also expected to benefit from the impact of Act 67, the Statewide Education and Workforce Development Act, passed earlier this year. Its goal is to improve the pool of employees by aligning workforce development activities. It created the Coordinating Council for Workforce Development (CCWD) and Regional Workforce Advisors (RWA) within DEW.
Act 67 is the outgrowth of a shift in how businesses choose where they want to establish their operation. In the past, access to transportation to move their goods to market was one of the top considerations.
That has shifted to locations with trained workers, Charles Appleby, Senior Advisor for the CCWD, told members of the North Augusta Chamber of Commerce during an August presentation.
“Workforce has become the primary component of everything business chooses,” he said. “During the pandemic, we saw quality of life jump up into the top three (priorities). Businesses used to decide, ‘I’m going to locate off of basic infrastructure, roads, sewer water.’ Now, they’re making decisions more on, ‘Do I believe I can find the people that will run my business.’ It became more important to find those people than find the perfect location.”
The 37 members of the CCWD are currently working on a Unified State Plan (USP) to provide guidelines to help businesses, educational institutions, and local governments develop a plan specific to local needs while fitting into the overall goals for South Carolina.
One item already finalized for the USP is occupation codes. It will require all businesses to provide specific numbers for its existing workforce. For example, a construction company currently reporting it has 100 employees will need to break that down into each category, such as 50 carpenters, 10 plumbers, 10 electricians, 10 masons, 10 heavy equipment operators, and 10 office staff. That provision takes effect in March 2024.
“This data is important to accurately understand the composition or gaps of our state’s current workforce and, looking ahead, better anticipate and meet our employers’ future workforce needs,” said Floyd.
Employers have been encouraged to begin using the codes in the fourth quarter of 2023.