Business

Elevated jobless rate in Springfield triggers extensions in unemployment benefits statewide

Unemployed residents can now claim 30 weeks of benefits, instead of 26.

A pedestrian passed the State House on Beacon Street in Boston in October 2019. Craig F. Walker/Globe Staff

April 24, 2025

3 minutes to read

An obscure Massachusetts law has triggered an extension of unemployment benefits after a regional jobless rate crossed a key threshold last month, just as concerns mount over the solvency of the state’s $2 billion-in-debt Unemployment Insurance Trust Fund.

The two-decades-old law requires that when the 12-month average local unemployment rate in at least one of the state’s Designated Metropolitan Areas is above 5.1%, the maximum benefit period for new and eligible existing claimants adjusts from 26 weeks to 30 weeks.

The 12-month average local unemployment rate for Springfield inched over the mark last month when it reported a 12-month average unemployment rate of 5.2%.

A reform measure reduced the benefit weeks during periods of lower unemployment in 2004.

However, since it requires every region in the state to have a 12-month average unemployment rate of 5.1% or less, the trigger has consistently been set at the higher 30-week level. The last time it switched from 30 weeks to 26 was in June 2023.

Matthew Kitsos, a spokesman for the Executive Office of Labor and Workforce Development, said the Department of Unemployment Assistance will contact claimants to discuss the next steps.

In the meantime, Kitso said the administration is working on conducting a comprehensive review of the Unemployment Insurance Trust Fund and implementing a new, modernized online system.

“We will continue to connect skilled workers with employers, train and prepare future talent, and make life more affordable for everyone,” Kitsos said in a statement.

Despite the unemployment rate increasing to 4.4% in March, the state’s Labor Force participation rate increased to 66.6%, meaning more people entered the workforce. The rate is 4.15% higher than the national average.

Troubled Fund

The Massachusetts Unemployment Insurance system, which employers fund, is ranked 47th in the nation for unemployment insurance taxes by the Tax Foundation.

“This places our state at a significant competitive disadvantage and calls out for reform,” James E. Rooney, president and CEO of the Greater Boston Chamber of Commerce, said in a statement.

One area of reform would be to modernize the trigger mechanism that extends 30 weeks of benefits statewide based on the unemployment rate in only one region, Rooney said. It is, after all, the most generous in the country, he said.

“Employers and residents depend on a functioning and effective UI system, and we need to consider commonsense solutions to bring solvency and balance to the UI Trust Fund,” Rooney said.

Paul Craney, the executive director of the Massachusetts Fiscal Alliance, agrees, saying the extension will drive up costs for businesses.

The Healey administration is increasing the rates without addressing the root concerns, Craney said. They are “kicking the can down the road” while “expecting us to pay more,” he said.

The Unemployment Insurance Trust Fund is already reeling from a debt of $2.1 billion it owes to the federal government, as it misused federal pandemic relief funds to cover unemployment benefits that the state was supposed to cover.

Even before Massachusetts faced the billion-dollar repayment, the state reported that it expected its Unemployment Insurance Trust Fund to be in the red by 2028.

Healey’s office said businesses won’t see a further hike in unemployment insurance rates through at least 2026. Still, long-term rates depend on additional reforms aimed at making the system more solvent.

“The cracks in our broken unemployment insurance system are now becoming chasms,” Christopher Carlozzi, Massachusetts state director for the National Federation of Independent Business, said in a statement. “This is yet another example of the Commonwealth’s outlier policies compounding a worsening UI crisis.”

Carolozzi asks elected officials to enact benefit and eligibility reforms before the unemployment insurance tax overwhelms small businesses.

“Delaying is no longer an option; the UI system must be fixed now before it is beyond repair,” Carolozzi said.