The 10 States That Could Be The Hardest Hit By A Lapse In Unemployment Benefits: 24/7 Wall Street
By 24/7 Wall Street: More than 2 million people receiving unemployment will lose coverage in December if Congress does not extend their benefits. In a report published in November, the Center on Budget and Policy Priorities (CBPP) concluded that certain federal unemployment benefits "will still be available in 10 states. ... [However], in all other states unemployed workers who exhaust their 26 weeks of regular [state] benefits without having found a job will receive no further benefits."
The number will likely increase by several hundred thousand people in the first quarter of next year. To understand the arithmetic behind the 2 million people whose support is at risk, the problem needs to be examined state-by-state. Based on research published by CBPP and the National Employment Law Project and interviews with CBPP's Chief Economist Chad Stone and NELP policy analyst Rebecca Dixon, 24/7 Wall St. has examined unemployment insurance programs for each state and the potential losses to their residents should federal benefits run out.
Unemployment insurance is the government's primary means of providing l help to people without jobs. States finance their own "Regular Program," providing unemployment insurance benefits to residents for up to 26 weeks, which is typically based on a person's earnings over a year.
Federal unemployment extensions, triggered after state coverage is exhausted, are provided through two programs, Emergency Unemployment Compensation (EUC) and extended benefits. The first to be triggered, EUC , gives up to 53 weeks of assistance based on the state's unemployment rate. Extended benefits, which further supplements coverage after emergency compensation is exhausted, provides up to 20 weeks.
Although the extended benefits program is usually split 50/50 between the state and the federal governments, The American Reinvestment and Recovery Act of 2009 gave states the option to have the program financed entirely by the federal government. Twenty-seven states took advantage of this offer. This means that when federal funding ends, the extended benefits program in those states ends.
Another 10 states, including the seven on our list, elected to enact permanent extended benefits programs that are not dependent upon federal funding to be triggered. As a result, these states can continue to cover up to 20 weeks of additional unemployment benefits.
What sets the Great Recession apart from other economic downturns is the huge numbers of unemployed and the length of time they are out of work. Federal Reserve Chairman Ben Bernanke recently commented that "This is very unusual and very worrisome because people who are out of work for an extended period, their skills tend to erode." That process of eroding skill along with an abiding hopelessness will only get worse as nearly 4 of 10 out of work Americans have been unemployed for over half a year.
Bernanke also observed what is obvious to most. The economy has grown slowly. Because it is uncertain how long it will continue, job creation has been nearly impossible. The jobless recovery has become no recovery at all. High unemployment weighs down consumer spending and business confidence, creating a vicious cycle which is not easily broken. The number of people who are chronically unemployed will grow and may do so for the next year or more until exports improve, the government embarks on more stimulus spending, or labor becomes so cheap that the hiring process begins again.
The debate about extending support to these 2 million people may not be over next year. The new Congress may decide to allow benefits to continue to lapse become providing additional support to the jobless would add tens of billions of dollars to the federal deficit, which politicians are not keen to do. The counter-argument is that people who are out of work are no longer consumers and become a burden on society.
Here is the 24/7 Wall St analysis of the two million person problem, focused on the ten states which account for over 70% of the total, and seven states where no benefits will run out this year. "All politics is local," the late House Speaker Tip O'Neill said. It appears that is the case for the long-term unemployment issue as well.
No. residents losing insurance in December: 66,800
No. of weeks (other unemployed residents may have): 26
Total population: 6,423,113
Indiana's unemployment rate has remained constant over the last year, hovering around 10%. However, according to Valerie Kroeger of the Indiana Department of Workforce Development, the size of Indiana's labor force and the amount of private sector jobs have both grown. This has led to an overall improvement in the unemployment rate, which lowered to 9.9% in October. Unfortunately for Indiana residents, that still keeps the state above the national average of 9.6%. (More info at 24/7 Wall Street.)
No. residents losing insurance in December: 88,500
No. of weeks: 26
Total population: 11,542,645
According to outgoing governor Ted Strickland, "Ohio's unemployment rate has fallen for seven consecutive months and Ohio had the fifth fastest-growing economy over the past 12 months, according to the Federal Reserve Bank in Philadelphia. Our forward-looking policies are putting Ohioans back to work, helping business recover from the global recession, and attracting new, growing industries to Ohio." The Governor has not yet commented about the 88,500 people who will lose all unemployment insurance in the coming month. (More info at 24/7 Wall Street.)
No. residents losing insurance in December: 90,000
No. of weeks: 26
Total population: 9,829,211
Georgia's unemployment rate, which stands at 9.9%, has exceeded the national average rate for 37 consecutive months, according to the state's labor department. Furthermore, the number of long-term jobless, defined as those out of work for at least 27 weeks, has increased by 63% from last October to this year. As a result, the state has increased unemployment taxes for about 15 percent of businesses in both 2009 and 2010. (More info at 24/7 Wall Street.)
No. residents losing insurance in December: 91,700
No. of weeks: 26
Total population: 9,969,727
Michigan, often the poster child for unemployment, has the second highest unemployment rate in the country at 12.8%. Some are forecasting that the state's economy will recover slowly. Progress has already been seen in cities including Detroit, but Michigan will have more than 90,000 people lose coverage in December. Michigan's Governor Jennifer Granholm recently urged Congress to pass the federal extension, claiming "In Michigan, we are emerging from these difficult economic times, but we still have many families who continue to weather this storm." (More info at 24/7 Wall Street.)
No. residents losing insurance in December: 107,500
No. of weeks: 26
Total population: 18,537,969
Florida has a high unemployment rate of 11.9% - the third worst in the country - with 1.1 million Floridians out of work. In January, state unemployment taxes will almost triple for most businesses that currently pay the minimum, increasing from around $25 to $70 per employee. Governor-elect Rick Scott has also pledged to create 700,000 new jobs in the state in seven years, although opponents have been highly skeptical of this plan. (More info at 24/7 Wall Street.)