A Benefit Ratio compares the benefits charged against your account to the size of your work force.
All the Benefit Charges charged against you are added up, usually over the last three years. The Taxable Wages are added up over the same period. These Charges are divided by these Wages. The resulting percentage is what is called your Benefit Ratio. It compares how much you cost the state to the size of your work force.
The Benefit Ratio provides a hand-to-mouth method of computing your UC rate. The idea is that if the charges divided by the wages equals this percentage, then this percentage times the wages the next year will pay off the charges incurred.
About a third of the states use a Benefit Ratio to determine Unemployment Tax Rates.