Rising unemployment taxes are keeping at least one company from creating new jobs in Iowa. Thomas L. Cardella and Associates runs call centers which contact customers for other businesses. Cardella, the C.E.O., says the company is canceling plans to bring 700 new positions to Iowa, 500 of which were destined for Cedar Rapids because of an increase in unemployment tax rates.
“We had been working very closely with the city of Cedar Rapids to bring those 500 jobs to the flooded areas in downtown Cedar Rapids, which would have brought in $15-million in payroll. That being said, we have to remain profitable in order to keep the current jobs in the state,” Cardella said.
In addition to the 500 jobs that were planned for Cedar Rapids, the company planned to hire another 100 each in Cedar Falls and Grinnell. Cardella says next year’s planned jump in the state’s unemployment tax rates was just too much.
“We’re going to be seeing a increase from a rate of 1.5% to 8.5% or an overall increase in 2011 of over $900,000 just for unemployment taxes.” An official with Iowa Workforce Development says some rates must be raised when the unemployment benefits fund gets dangerously low.
I.W.D. spokeswoman Kerry Koonce says those rates will be the highest for companies, like customer call centers, which frequently terminate employees.
“If your company has had a lot of benefits paid out in unemployment benefits against the trust fund, your rate is based upon that. We can have two companies, same type of industry, but if one of them has not gone through layoffs, has not had a lot of claims filed against them, they won’t have a change in their rate. In fact, they could even see a decrease in their rate.”
Cardella says he’s meeting with Workforce Development officials to discuss abuse of the unemployment system and future job growth in Iowa. Those 700 jobs will be going another, still-unnamed state. Cardella admits his company has lost numerous disputes over unemployment claims, but he says the claims process is subject to frequent abuse.