Experience-Rating Operations in 1942

E X P E R I E N C E R A T I N G PLANS were in operation during 1942 in 34 States, an increase of 21 States over 1940 and 17 over 1941. In 1944, plans are scheduled to be in effect in all 38 States which have such provisions in their laws. Covered employment in the 34 States constituted more than half (57 percent in September 1941) of the total for the United States. Although contributions for 1942 exceeded those for 1941, the estimated loss in contributions, due to experience rating, was considerably greater for the country as a whole in 1942 than in 1941—21 percent as against 6 percent. For the 34 States the loss in employer contributions, based on estimated 1942 wages, was equal to 37 percent of the amount which the standard rate would have produced, in contrast to 23 percent in 1941. The estimated average employer contribution rate for the 34 States is 1.7 percent, and for the United States, 2.1 percent. An unusually large number of new firms in manufacturing industries may raise the average rate slightly, since their pay rolls will be taxed at the standard rate until they have been in business long enough to be eligible for rate modification. The percentage of employers in experiencerating States who were eligible for rate modification increased from 60 percent in 1941 to 65 percent in 1942. Reduced contribution rates were assigned to 67 percent of all rated accounts in 1942, in contrast to 55 percent in 1941. Rates above the standard 1 were received by 8.5 percent of all rated accounts in 1942 but by 13.3 percent in 1941. As was the case in 1941, the data for 1942 indicated that the percentages of employers obtaining reduced rates are consistently largest in the industries normally characterized by relatively stable employment, such as wholesale and retail trade; finance, insurance, and real estate; and the service industries. Although 1942 data showed no clearer relationship than was found in 1941 in each State between contribution rates and size of firm (in terms of average annual pay roll), for all 34 States combined the proportion of rate reductions increased as the average pay roll increased.