States running out of money for jobless benefits
Filed under: Career, Recession
States are running out of money to pay unemployment claims, forcing them to borrow money from the federal government or increase taxes on businesses to pay the benefits, according to a New York Times story.
The National Association of State Workforce Agencies reports that 30 states are at risk of not having the money to pay unemployment benefits. Indiana, which has a 6.4% unemployment rate, and Michigan (9.3% unemployment) are already borrowing from the feds and other states that are in a financial crisis, such as California, may be in line soon.
Unemployment taxes are collected by states from employers, but the rate varies by state. Trust funds are supposed to be built up in good times to cover benefit requests later. The benefits are guaranteed by the federal government.
Indiana created its own problem by keeping unemployment tax rates artificially low by reducing the tax rates to businesses by 25% in 2001.
To make matters worse, states that borrow money to pay the claims must pay them back within the federal fiscal year. If not, 4.7% interest accrues, which cuts in to states' general funds.
"With longer term solvency issues due to the sharp increase in unemployment, federal borrowing quickly becomes expensive," Loree Levy, a spokeswoman for the Employment Development Department in California, told the Times. "We are anticipating interest payments of $20 million in 2009-10 and if nothing is done to revise the revenue generation model the interest would be $150 million in 2010-11."
And the unemployment rate only keeps getting higher. In November the national unemployment rate was at 6.7% while 250,000 people joined the unemployed in November.
Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job hunt at www.talesofanunemployeddad.blogspot.com
Reader Comments (Page 1 of 2)
12-16-2008 @ 12:34PM
CASHFLO said...
AMERICA IS SCREWED THE US DOLLAR WILL TANK BUY PHYSICAL GOLD . MUSSALINI HAS LANDED IN DC
Reply
12-16-2008 @ 2:25PM
Brandon said...
I got laid off November 17th in Indiana and haven't saw a penny from the state yet!
Reply
12-16-2008 @ 9:32PM
matthew said...
Make sure you do everything by the book (the book they sent you telling you the provisions of the unemployment benefit laws of your state). They will look for every excuse in the book to disqualify you from collecting unemployment benefits. 1. make absolutely certain you file each and every week. If you miss sending in a claim or if the claim is received late, they will not pay it. 2. Fill out your job search log religiously. They will not pay if you are not actively seeking work during the claim week. 3. If they send you a job referral, you must apply for that job. If you refuse a referral, you can be disqualified for benefits until you earn eight times your weekly benefit amount in employment covered by the unemployment benefit laws. 4. Make sure you send in your wage verifications if you are partially unemployed. If they fail to receive the wage verification on time, you can be disqualified from receiving benefits for that week. I suggest you get a cerfificate of mailing from USPS to prove you sent it in case the unemployment office loses it (this happened to me).
12-16-2008 @ 2:40PM
ilkee said...
Bandon....Call Obama, surely the chosen one can help you. LOL
Reply
12-16-2008 @ 4:42PM
DannyCalifornia said...
How funny! Thank god for quick-witted people like you to keep democrats in check.
12-16-2008 @ 6:25PM
Cheryl said...
Sorry, can't. Dumya is still (P)resident in the White House. Besides, he created the problem ... why would Dumya give anything to the middle class???? His original plan was to destroy it.
12-16-2008 @ 7:26PM
DEBBIE said...
SURELY YOU ARE DUMB TO MAKE A STATEMENTLIKE THAT WHY DON'T YOU CALL ON BUSH HE IS THE ONE THAT MESS UP ALL THAT IS WRONG.
12-16-2008 @ 2:49PM
Lyne said...
When is someone going to use their head and realize that a lot of our problems could be resolved if we force companies to bring jobs back to this country - i.e. GM - they were paid by the government to send jobs to China. We used to have American made clothes. Many of us would love to have American made products (and willing to pay a little more) for something that will last through more than one washing, a car that is not constantly in recall status, and FOOD AND DRUGS THAT HAVE NOT BEEN POISONED. Wake up America before America disappears.
Reply
12-16-2008 @ 3:09PM
Matt said...
Interesting... the bio line for Aaron Crowe states he is an unemployed journalist. I am assuming then that he wrote this article for free? If his journalistic pieces aren't good enough for an employer to pay for, then maybe he should seek another line of work.
Reply
12-16-2008 @ 3:39PM
michelle said...
It's time for our public servants, aka: the politicians we elected to represent us, to start serving us by giving their constituents 50% of their salaries. We all don't have the privilege of giving ourselves raises and most of us actually deserve them! Merry Christmas!!!
Reply
12-16-2008 @ 5:08PM
vynne said...
I have been waiting for unemployment benefits since October and now they just told me it will be another 3 months!!! What is going on here?? why isnt anyone doing anything about this?? What are we supposed to do in the meantime???we still have bills to pay !! this is how people become homeless!! I have paid into unemloyent 35 years of my life and when I need it they tell me too bad.This is Crazy!! someone please help!!
Reply
12-16-2008 @ 5:14PM
Mike said...
Brandon, Do what I did. Left Indiana and moved to Virginia. There are jobs here.
Reply
12-16-2008 @ 5:28PM
Carol said...
Sure has to make all the unemployed feel warm and fuzzy that Obama has spent over half a BILLION dollars just on himself and his campaign. He just cares soooo much for the American people. Yeah.
Reply
12-16-2008 @ 5:31PM
rmrmsix said...
Well if the government would stop extending unemployment and the dead beats would find something to do, it is called work, then the money wouldn't be disappearing so fast. Remember we also have to pay for the illegals in this country, the unemployed need to find a job and pay for them too!!
Reply
12-16-2008 @ 7:12PM
Nickie said...
Wake up and crawl out underneath your rock. Deadbeats, people that got laid off because companies have to answer to shareholders. People are not hiring unless they have to . You make me sick , I wish nothing but bad things for you . Like to be unemployed.
12-16-2008 @ 7:42PM
willow said...
I was laid off 1 month ago. I spend 4-6 hrs everyday looking for work. Online, recruiters, and hitting the pavement. I just received my first unemployment check, due to delays. It was terrifying. I have worked for over 34 years and would like nothing more to be working now. Not everyone on unemployment is a deadbeat, and unemployment rarely covers all the bills. I realize you must be one of the more fortunate people that still has a job so I'll tolerate your ignorance.
12-16-2008 @ 6:23PM
Rocky said...
Been laid off for a month in Illinois as a union electrician no jobs for electricians in this state anywhere. Have not been able to collect unemployment and running out of funds see what banks not bonding jobs does and what hiring cheap labor under right to work law does to the economy.
Reply
12-16-2008 @ 8:12PM
Deborah said...
Rocky, email me at banjopicker384@aol.com. I know where they are hiring electricians. This job will be until around 2013. My husband just retired from GM and started last week. The job is in Indiana
12-16-2008 @ 6:03PM
Mick Tigonto said...
Brandon - The first thing to do before you get that next job: Take an English course! "Haven't saw"? You've got to be kidding me! I Haven't SEEN anyone correcting your obscene grammar!
Reply
12-16-2008 @ 6:26PM
Glen said...
Speaking of being grammatically correct Mr. Mick Togonto you should follow some of your own advice we do not capitalize the entire word letter for letter in the English language either. Is school on the horizon for you?