Experience rating in Massachusetts.

Abstract

Experience rating is not an idea that was conceived in this country. Great Britain and Germany both experimented with the idea before this country even had an unemployment insurance law. The plan was soon found to be unsuccessful by both countries, and it was dropped from the law in order to protect the benefit fund and to prevent some industries from paying outrageously high tax rates.

The United States incorporated experience rating in its unemployment insurance law and by 1948 every state had some type of merit rating provision. There are five distinct experience ratings in use in this country - the payroll decline, compensable-separations, reserve-ration, benefit-ration, and benefit-wage ration plans. All the plans have certain things in common in spite of essential differences. They are all devised to establish the relative experience of individual employers with unemployment or benefit costs.[TRUNCATED]

Employers must remember that the structure of industry in Massachusetts does not permit the fund to be adequately financed by experience rating. Unemployment will be higher here than in other sections of the country. An attempt to cut into workers' benefits is no solution, for it does not attack the cause of the dilemma. Unless the economy of this state can be re-vitalized, experience rating must be abolished so that the fund will be adequate to meet the claims of the unemployed.