Some States Reducing Jobless Benefits

Published by: Kelly Curtis on 23rd May 2011 | View all blogs by Kelly Curtis
Some States Reducing Jobless Benefits

A number of U.S. states that have drained their unemployment insurance funds are reducing the number of weeks that laid-off workers can collect those benefits.  Legislators are hesitant to raise taxes because they fear it will prevent businesses from ramping up hiring, instead hoping that the federal government will step in when times get bad.

The maximum number of weeks of jobless benefits has been reduced in Michigan, Arkansas, and Missouri, while Florida is currently considering the move.  The unemployment rates in those states ranges from 7.8 percent in Arkansas to 11.1 percent in Florida.  The benefit cuts come as a result of depleted state unemployment insurance programs.  As more and more workers lost their jobs during the recession, the funds set aside to pay jobless claims was devastated.

About 30 of the 50 U.S. states were forced to request a total of $44 billion from the federal government to continue paying out unemployment benefits.  The problem was particularly server in a handful of states where the reserves for jobless claims were near historically-low levels heading into the recession.  The financial responsibility for replenishing the unemployment funds and paying off the federal loans will ultimately fall on businesses, but states are cutting benefits to limit the inevitable tax hikes.

Most states provide up to 26 weeks of unemployment benefits for workers who lose their jobs through no fault of their own.  Michigan and Missouri have reduced that figure to 20 weeks, while Arkansas reduced it to 25.  Florida is contemplating a more complex change that would link the duration of benefits to the strength of the economy.  The cap would be 23 weeks during periods of double-digit unemplyment and fall to as low as 12 weeks when the unemployment rate was extremely low.  The measure has been approved by the state's legislature, but has yet to be signed by the governor.

After unemployed workers exhaust their regular state benefits, they are usually eligible for an additional 13 to 20 weeks of emergency state benefits, which are paid for by the state and federal governments together.  After that, they are eligible for several more months of federal benefits paid for entirely by the federal government.

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