Facing Deadline, States to Cut Jobless Benefits

Friday, 19 Aug 2011 08:06 AM

By Greg McDonald

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State governments across the country are cutting their unemployment benefit programs — and raising payroll taxes in some cases — to save money so they can start paying back the $37 billion in federal loans they borrowed to help pay the jobless.

According to a story published by the Stateline.org news and research service, at least 10 state legislatures have opted to either reduce benefit payments or the amount of time benefits can be received. Several others, meanwhile, have raised payroll taxes on businesses to lessen the drain on jobless trust funds.

According to Stateline, one state — Florida — has chosen to pursue all three options so it can start paying back an estimated $62 million in interest on its $1.7 billion loan by Sept. 30. That’s the deadline for  30 states to begin paying back the $37 billion they borrowed to refill their own unemployment trust funds that were drained during the recession.

“We knew we had to make changes,” Florida State Rep. Doug Holder told Stateline. “Our unemployment insurance trust fund has been broke since 2009.”

The story noted the average length of time a jobless American spends looking for work in the current economy is about 40 weeks. That’s the longest average duration of unemployment for an American since the government began keeping data in 1948.

Christine Owens, executive director of the National Employment Law Project, told Stateline that now is not the time to cut benefits.

“It’s disconcerting that these lawmakers would expend so much energy making cuts to state unemployment insurance programs when more people are out of work for longer than any other period on record,” she said.

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