The cost of hire per employee is going up in 2014, especially at the lower end of the wage scale. Even though Congress has held off on extending federal benefits for long term unemployed, (so far), FICA tax rates, and minimum wages rise this year.
At the federal level, employers and employees will contribute more to Social Security on higher salaried staff. The taxable wage base for Social Security has increased by $3,300 to $117,000 as of January 2014. An estimated 10 million US wage earners (and their employers) will owe more taxes according to the Social Security Administration. As regards unemployment costs, 1.7 Million Americans are “one Republican vote away” from seeing their unemployment extensions restored, according to Senate Majority Leader Harry Reid on February 6, 2014. (Approximately 60,000 of these are Massachusetts claimants.) Further federal benefits extension will result in higher FUTA taxes for employers.
On the state level, Rhode Island and Massachusetts are devising ways to recoup the cost of state unemployment benefits and of benefits administration (SUTA). Rhode Island has already borrowed heavily from the federal government to finance past unemployment benefits. Effective January 1, 2014, Rhode Island’s taxable payroll wage base has risen to a minimum $20,600.
The Massachusetts Senate has voted to hike the taxable payroll base from $10,000 to $20,000 and to raise the tax rate on employers who have frequent layoffs. A companion bill will increase the minimum wage: from $8 to $9 an hour sixty days after passage of the bill, to $10 an hour on July 1, 2014, to $11 an hour on July 1, 2015. Other provisions will ensure that wages will rise significantly this year and in the future.
This much is clear. Employees will cost more in 2014.