Ever wonder how your State Unemployment Rate is calculated?
States use one of four methods to determine an employer’s experience rate: reserve ratio (most common), benefit ratio, benefit wage ratio, and payroll stabilization. Reserve Ratio = Unemloyment taxes paid – Benefits Charged Average Taxable Payroll Benefits Ratio = Benefits Charged Total Taxable Payroll Benefit Wage Ratio = Benefit Wages Paid Total Taxable Payroll Payroll Stabilization. Currently Alaska is the only state utilizing this method. Under payroll stabilization, the employer’s tax rate is determined by quarter to quarter, and year to year payroll fluctuations. Essentially, as more employees are terminated and total payroll decreases, the employer’s tax rate will increase. [...]