Essentially, high rates of unemployment have led to tax increases that are further suppressing hiring - thus making an already-ugly unemployment problem even worse.
That's bad news for thousands of prospective employers and millions of Americans.
Paying for the UnemployedSept. 30 was the deadline for states to pay more than $1 billion in interest payments for loans used to cover unemployment benefits. It was the first time since the start of the economic downturn that states had to pay interest on federal borrowing.
And many states were forced to raise unemployment taxes to cope with the extra burden.
Employers in 2010 paid 27.8% more in state jobless taxes than they did in 2009. Employers in 24 states will have to pay between $21 and $63 more per employee following another tax hike in January 2012.
"Unemployment taxes, which were a relatively low bottom-line cost in 2008, are now becoming a significant cost," Doug Holmes, president of UWC - Strategic Services on Unemployment & Workers' Compensation, told CNNMoney. "It discourages companies from electing to hire new employees."
The extra expenses hit small businesses especially hard.
"We try not to hire because we will be socked by a bigger tax bill for unemployment insurance," Margery Keskin, an executive at four small construction-related companies in New York, told CNNMoney. Keskin said she's had to take money from bonuses and profit-sharing plans to pay higher unemployment taxes.
Job Cuts AheadThese additional costs are just the latest obstacles hitting the dismal U.S. jobs environment. While businesses are already uninterested in hiring new workers, the added expenses paired with the weak economic outlook will lead some companies to trim their workforce.
A quarterly survey released last week by the Business Roundtable found 24% of chief executive officers (CEOs) expect to cut U.S. jobs over the next six months, up from 11% in the second quarter.