State UI trust funds are largely financed by employer contributions (except in Alaska, New Jersey and Pennsylvania, where employees also make contributions). States are required to maintain an SUI wage base of no less than the limit set under FUTA. The 2017 FUTA wage base of $7,000 has remained unchanged since 1983, despite increases in the federal minimum wage and annual cost-of-living adjustments over the last 34 years.

Some states are conservative in their approach to maintaining adequate UI trust fund reserves. Consequently, the UI wage base is flexible, meaning it is indexed to the average wage or varies based on the trust fund balance. According to the DOL, 23 states and the Virgin Islands had a flexible wage base in 2016. Conversely, in 2016, the wage base was fixed in 28 states and Puerto Rico. (U.S. Department of Labor, Comparison of State Unemployment Laws, May 2016.)

The recent strain on UI trust fund reserves sparked numerous state wage base changes. As a result, only three jurisdictions continue to have a fixed wage base of $7,000 (Arizona, California and Puerto Rico), compared to seven in 2010 (although in Louisiana and Tennessee the taxable wage base can decrease to $7,000 when the trust fund reaches a certain level, and in Florida the taxable wage base reverted to $7,000 in 2015 and 2016).

For more unemployment insurance facts and trends to consider see our Guide to Unemployment Insurance.

Attachments:

— 2017 state unemployment taxable wage bases
— 2017 state disability insurance rates and limits

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ATTACHMENTS

2017 state disability insurance rates and limits

2017 state unemployment taxable wage bases