Maryland is quietly considering a policy change that could permanently increase the cost of employing people.
Most employers aren’t paying attention yet, but they should be.
SB3, the Unemployment Insurance Modernization Act of 2026, would tie unemployment benefits directly to the state’s average weekly wage and adjust the taxable wage base used to calculate employer contributions. (Link to bill: https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/SB0003?ys=2026RS)
That sounds technical, but it isn’t. The bill creates an automatic cost escalator on employment in Maryland. When unemployment benefits increase structurally, employer taxes increase structurally. Not temporarily. Permanently. This shifts unemployment insurance from a cyclical cost to a continuously rising fixed cost tied to wage growth.
Let’s be clear about what this means in practice. It means employing people in Maryland becomes more expensive every year, regardless of business performance. It means employers will absorb more financial risk simply for maintaining a workforce. And it means workforce decisions will change as a direct result. When the cost of employment rises structurally, employers respond predictably:
- They hire more slowly
- They automate faster
- They restructure more aggressively
- They rely more heavily on contract labor
- They become more risk-averse in workforce decisions
Not because they want to, but because they have to. Policies like this don’t exist in isolation. They directly shape employer behavior. Maryland and specifically Frederick County already face intense competition for employers, particularly from Virginia, West Virginia, and Pennsylvania. Increasing the structural cost of employment makes Maryland less competitive, especially for small and mid-sized businesses that drive most job creation. Large organizations may be able to absorb the impact initially, but smaller employers will feel it immediately. This is the part policymakers often underestimate: employers do not absorb structural cost increases passively. They adapt. And those adaptations ripple across hiring, wages, and job availability. This bill is not simply about unemployment benefits. It is about the long-term cost and risk of employing people in Maryland.
If you are a Maryland business owner, executive, or HR leader, now is the time to understand how this could impact your workforce strategy, hiring plans, and cost structure over the next five years. Workforce costs are no longer just an operational issue. They are a strategic risk.
Even if this bill fails to make it out of committee during this session, we are sure to see this bill or something similar introduced in subsequent sessions, so we need to be vigilant in watching how this plays out and doing our part to advocate for our organizations and the larger business community in Maryland.
About the Author: Amanda Haddaway is a nationally recognized HR consultant, corporate trainer and executive coach who has spent her career helping organizations solve complex people challenges with clarity and confidence. As the managing director of HR Answerbox, she partners with business owners and leaders to strengthen workplace performance, build leadership capability and create healthier, more resilient cultures.
She also leads the Trainers and Consultants Referral Network, a curated community of more than 260 specialized HR/OD consultants, trainers, coaches and speakers. Through this platform, she helps employers quickly connect with high-caliber talent for learning, development and organizational effectiveness needs.
Phone: 703.338.7176
Email: amanda@hranswerbox.com
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Frederick Chamber Insights is a news outlet of the Frederick County Chamber of Commerce. For more information about membership, programs and initiatives, please visit our website.