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States Cutting Unemployment Benefits: the Good, the Bad and the Ugly - Part 2

Florida Gov. Rick Scott wants to cut unemployment benefits.
Florida Gov. Rick Scott wants to cut unemployment benefits.

In a previous post States cutting unemployment benefits: the good, the bad and the ugly. H.R 589 I discussed how some states are addressing unemployment benefit extensions. States are still battling with the issue. Some state legislators are helping the unemployed, while other states are cutting benefits during a time of very slow job growth.

States across the country are dealing with balanced budget issues. Unlike the federal government, states need to produce balanced budgets. Most states are reluctant to raise taxes in a recession, since the voters aren’t in the mood to pay more money for the same services. And taxing the wealthy isn’t possible, since the wealthy own access to most statehouses and threaten to stop campaign contributions. As a result, states are cutting funding in areas of the budget that seem to receive voter approval; aid to the poor and the unemployed.

The Good:

New Jersey

The Democratic State Senate in New Jersey is taking a different approach by recalculating the federal guidelines which will allow for unemployed New Jerseyans to collect 20 weeks of extended benefits.

The bill would broaden the first trigger to account for the unemployment rate for the preceding three years as opposed to the preceding two. By broadening the 110 percent trigger, New Jersey would be able to continue providing extended benefits, because the unemployment rate in 2008 was between 4.2 and 6.0 percent. The continued payment extended benefits would not result an increased cost to the State's Unemployment Insurance Fund, because the federal act provides for full federal funding of extended benefits through December 31, 2011.

New Jersey legislators realize that this extension will not affect their state budget and it will help thousands of unemployed. What stands in the way of this bill being passed? Republican Gov. Christie still needs to sign the legislation.

New York:

New York, like New Jersey, is expected to approve legislation that will allow extended unemployment benefits for up to 166,000 unemployed New Yorkers.

The new bill will amend state law and allow New York to qualify for a third year in the program. It is estimated that 166,000 unemployed New Yorkers will be affected by this legislation.

"This legislation is crucial aid for unemployed New Yorkers, because without it the state will forfeit an estimated $620 million in federally funded unemployment insurance benefits," Thiele noted.

While New Jersey unemployed wait on republican Gov. Christie to sign extended unemployment legislation, New York’s democratic Gov. Cuomo is expected to sign extended unemployment benefits legislation.


By unanimous vote, the House passed Senate Bill 637, which would allow the state to draw additional federal unemployment money through the end of the year. There are currently 11,876 people participating in the federal extended benefits program, according to the Oregon Employment Department. With the legislation, officials estimate about 50,000 out-of-work Oregonians would qualify by the end of the year.

Under a plan approved by Congress in December, the federal government will pick up all the costs.

The House also endorsed Senate Bill 638, which offers an additional six weeks of state benefits to Oregonians who have been out of work for more than 99 weeks and have exhausted all other benefits, including the federal extensions.

The Bad


Some Missouri State Senate Republicans want to refuse federal funds that would allow unemployed Missourians to collect an additional 20 weeks of benefits:

Republican lawmakers in Missouri are balking at accepting federal dollars to pay for 20 weeks of unemployment benefits for the long-term jobless, even though the spending would not affect state budgets, and legislators in Michigan may follow suit.

Five Republicans in the Missouri Senate have launched a filibuster to prevent their legislature from implementing a technical change to its laws that would allow the state to accept the funds, which total roughly $96 million.

Unfortunately, a few Missouri State Senate republicans could suddenly end extended unemployment benefits for thousands of Missourians:

Long-term unemployed in Missouri will lose their benefits - The extended benefits program, which has been in place in Missouri for two years, uses federal funds to provide unemployment benefits up to 99 weeks. It would have funneled about $106 million in federal money to the state’s unemployed beginning in April and running through next January.

Other state and federal unemployment programs provide benefits up to 79 weeks and will remain in place.

But Thursday — the General Assembly’s last work day before a 10-day spring break — was effectively the deadline to pass the bill without an interruption of benefits for those unemployed past 79 weeks.

Because the Senate failed to act, the extended benefits program will expire March 27, and the final checks will go out April 2.

The state Department of Labor estimates 11,700 Missourians were receiving extended benefits in early March, while about 6,500 more were nearing the 79-week cutoff.

About 950 unemployed workers become eligible for the extended benefits each week, according to department officials.


In Michigan, they give and they take away:

While federally funded extended benefits are likely to be approved, there will be a cut in future state unemployment benefits:

Michigan’s long-term unemployed may soon be called 93ers instead of 99ers after the Republican-led state legislature passed a bill to reduce Tier 1 unemployment benefits from 26 weeks to 20 weeks for those who apply for benefits after January 2012.

The bill, which was written to prevent unemployment fraud, contained two amendments — one of which helps those currently unemployed avoid being cut off early. If that provision was not passed by Friday, 150,000 Michigan residents currently receiving unemployment would have lost their benefits before they ran out If Michigan again sees a job crisis, the unemployed will only receive 20 weeks of jobless benefits. How that will mesh with any federal program hasn’t been considered at this time.

A video of Michigan unemployed affected by unemployment legislation is attached.


Legislation takes away future state benefits:

Florida’s Republican-controlled House passed a bill curbing unemployment benefits as the state announced its jobless rate remained above 11 percent for the 15th consecutive month.

The bill, which passed by 81 to 38 in Tallahassee today, would reduce benefit coverage to 20 weeks from 26 and cap the maximum weekly payment at the current $275. The measure now moves to the Senate, also led by Republicans.

As with Michigan, this only affects state benefits, but how that will mesh with federal benefits is anyone’s guess at this point.


The Arkansas State Senate passed legislation that cuts the eligible unemployment benefit weeks by one and adds some qualifications.

Under the bill, the 26-week benefit period would be shortened to 25 weeks. Some of the qualifications for benefits also would be modified, he said.

The bill also requires that people who refuse to take another job at their place of employment, rather than being fired for poor performance, would not be eligible for benefits.

The Ugly


While any system designed to send money to individuals can be abused, it’s especially costly when the unemployed are the ones doing the abusing. A Michigan investigation showed millions of dollars in fraudulent claims attributed to false reporting and shoddy payment practices by the state’s employment department.

An newly released report by the Michigan Auditor General says Michigan passed out an extra $72.5 million in unemployment benefits, and failed to enforce fraud-related penalties of up to $236 million.

Of the $72.5 million in overpayments, $8.2 million were from not adequately verifying a claimant’s identity, $7.9 million were from payments to ineligible aliens and $400,000 were paid out to dead people.

With more states trying to save money, the unemployed and the poor are the perfect scapegoats for cuts, especially when fraud can be proved. Business tax fraud, government fraud and mismanagement are not given the same weight as fraud perpetrated by poor and unemployed citizens.

The Great Recession may be considered by some to be over, but the supposed recovery is still fragile and the job market has not provided the jobs necessary to substantially lower the unemployment rate. The main reason why the unemployment rate has fallen in the past two months is that so many people have given up looking for work.

If you actually adjust for the fact that the labour force participation rate has plunged this cycle to a 27-year low the unemployment would be sitting at 12% today.

Another fact that needs to be considered by these legislators in states considering the ending of extended benefits is that it will take the creation of 300,000 jobs each month for the next three years to reduce the unemployment rate to 7%, which is still historically high.

Currently there are more than 8 unemployed/underemployed and looking for a job for each one job opening. That's not a jobs statistic that shows robust employment opportunities.

While the corporate media talking heads and government spin masters speak of a jobs recovery, the facts show otherwise. More than 6 million unemployed have been out of work for more than 27 weeks and the ranks of the 99ers continues growing with estimates ranging from two to 4 million or more.

This is still a very difficult job market and until jobs are created in large numbers, unemployment benefits need to be extended.

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