Austerity Measures Against the People

Despite High Unemployment, States Look to Slash Jobless Aid

March 25, 2011

The Lookout - Michigan has an unemployment rate of 10.7 percent -- almost 2 percentage points above the national average. But it's moving to cut unemployment benefits nonetheless. And it's not alone in seeking to limit help for the jobless.

State legislators yesterday passed a bill that reduces the maximum amount of time a person can receive unemployment benefits from 26 to 20 weeks, and Governor Rick Snyder, a Republican, has said he'll sign it. Current recipients of jobless benefits are not affected.

Meanwhile, Florida and Arkansas are considering similar measures, and Indiana wants to limit the number of people eligible for benefits.

All this comes at a time when long-term unemployment is at an all-time high. Nearly 44 percent of the jobless have been out of work for more than six months, the Labor Department has said.

States say they're looking to avoid a hit to businesses. Because jobless claims surged during the Great Recession, state unemployment trust funds are drained, forcing them to borrow from the federal fund. Now, 32 states owe a total of $45.7 billion to the federal fund, and may have to pay $1.4 billion in interest. That, in turn, will force businesses to pay higher unemployment taxes, since that's how the trust funds are financed.

"It's a disincentive to move to the state of Florida with a new business or for a business that's here to expand if they have to pay all this money per employee," Florida state Rep. Doug Holmes has said.

As we've reported, some states have even turned down federal money for jobless benefits, because that too would have led to a small increase in taxes on businesses.

But opponents say it breaks with half a century of precedent, in which nearly every state has offered benefits for at least 26 weeks. Rep. Sander Levin, a Michigan Democrat, called it "frightfully short-sighted for the individual families."