But here’s the thing. While nearly everyone agrees the system is broken, there’s little consensus on how to fix it and prevent a looming insolvency.AdvertisementBusinesses want the state to cut unemployment benefits and tighten eligibility requirements. Unions are fiercely opposed. And the governor and lawmakers are hesitant to talk specifics.Get Starting PointA guide through the most important stories of the morning, delivered Monday, Wednesday, and Friday.“There seems to be a huge gulf between business groups and the state,” said Evan Horowitz, director of the Center for State Policy Analysis at Tufts University.Can Healey craft a compromise? Can she get Beacon Hill to finally solve a problem it has kicked down the road for years?Don’t bet on it.Reality check: Business groups are fed up.It’s beyond unfair, in their view, to force employers to pump more money into a sinking system until the state brings UI benefits — the nation’s most generous — in line with other states. And they say it’s too easy for people with erratic work histories to qualify for benefits.“We are digging in on this,” said Chris Carlozzi, state director of the National Federation of Independent Business.Grievances: Employers have a long list of complaints.Massachusetts UI taxes, already among the steepest in the country, rose this year and will do so again in 2026.Many states tapped federal pandemic aid to replenish their unemployment trust funds. But lawmakers here allocated just $500 million and sold $2.7 billion in bonds, leaving employers to pay off the debt through a UI tax surcharge.The bookkeeping blunder wasn’t uncovered until after the Legislature shored up the trust fund in 2022. If lawmakers had known employers were on the hook for $2.5 billion, they might have diverted more federal relief money to the trust fund.Final straw: After 18 months of negotiations, and just a few days before President Trump took office, Healey signed a deal to resolve the accounting mistake by requiring the trust fund to reimburse the US Department of Labor $2.1 billion over 10 years — a 20 percent discount on the principal owed.Employers are fuming over the $200-million-a-year burden.“The Legislature needs to understand that something important has to be done about the UI system,” said Carlozzi.AdvertisementThe other side: Labor and progressive groups want to protect the UI safety net for laid-off workers.“It’s a funding issue,” said Frank Callahan, president of the Massachusetts Building Trades Unions. “It’s the wrong approach to cut benefits,” he said, especially with the unemployment rate ticking up.Callahan is open to reform, but he said he’d like to see the state go after employers who avoid UI taxes by paying workers off the books. Gig workers like Uber drivers should be classified as employees, not independent contractors who aren’t eligible for jobless benefits, he said.Step back: A lot of work has already been done on UI reform.Starting in mid-2021, when a $7 billion trust fund deficit loomed, a special legislative commission spent the better part of a year developing recommendations to right the UI ship. They included:Freezing weekly benefits increases for four years.Resetting the maximum benefit period to 26 weeks from 30.Adopting stricter eligibility standards.Studying tax hikes, including an increase to the amount of an employee’s salary — currently up to $15,000 — that is taxed.The commission failed to come to a consensus, in part because the Baker administration released rosier trust fund projections.Final thought: The commission’s stalemate represented a missed opportunity.While employers sound like a broken record, they are right to push hard for a UI overhaul before being hit by higher taxes. The system hampers the state’s ability to attract and retain jobs.“Success isn’t merely solvency,” said Doug Howgate, president of the Massachusetts Taxpayers Foundation. “We need to reduce total spending.”It’s time for Healey to take the lead and the Legislature to make the tough choices.Larry Edelman can be reached at larry.edelman@globe.com.
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