Skyrocketing unemployment insurance (UI) taxes are in the news in states from coast to coast these days. But amid the controversy, a little-known fact is that this tax burden can be dramatically reduced by employers themselves -- if they invest in an effective outplacement program.

A RiseSmart analysis shows that investing in an ROI-focused outplacement program is the single best option for companies wishing to protect themselves against rising UI taxes. According to the analysis, an employer that reduces headcount by 75 employees today may be expected to pay more than $1 million in unemployment taxes over the next 12 to 24 months. This cost estimate assumes the employer’s laid-off workers require an average of 37 weeks to find new jobs; 37 weeks was the average duration of unemployment in February 2011, as measured by the Bureau of Labor Statistics.

This same employer, however, can reduce its UI tax burden by more than $500,000 – more than half its total tax – by decreasing the average duration of unemployment of its laid-off workers to 18 weeks. This reduction in unemployment duration has been achieved by the RiseSmart Transition Concierge® outplacement program throughout the course of the current economic downturn.

For all the debate over rising state UI taxes, the fact is that unemployment insurance is 100 percent employer funded, and we shouldn't expect that to change anytime soon -- recession or no recession.

If you lay off workers and the state pays them unemployment benefits, you will ultimately reimburse the state for those expenses through UI taxes. That means an outplacement program that puts employees back to work faster can generate significant cost savings for your business.

Now more than ever, outplacement is a win-win for employers and employees. The key is finding an outplacement provider than delivers results.

At RiseSmart, we can calculate the potential savings in any state and for any business. Whether you're an HR executive or CFO, just give us a call and we will crunch the numbers most relevant to you.

10 March 2011

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