33 states out of money to fund jobless benefits

[disorderlyvision]

http://money.cnn.com/2010/04/08/news/economy/state_funds_jobless_benefits/index.htm


With unemployment still at a severe high, a majority of states have drained their jobless benefit funds, forcing them to borrow billions from the federal government to help out-of-work Americans.

A total of 33 states and the Virgin Islands have depleted their funds and borrowed more than $38.7 billion to provide a safety net, according to a report released Thursday by the National Employment Law Project. Four others are at the brink of insolvency.

Debt-challenged California has borrowed the most, totaling more than $8.4 billion, followed by Michigan and New York, which have loans worth more than $3 billion. Nine other states have borrowed at least $1 billion from the federal government.

"The nation's financing system for jobless benefits is under unprecedented stress," said Andrew Stettner, deputy director of the New York-based advocacy group for the unemployed. "While the recession has certainly made things worse, this funding crisis has been developing for years."

At the onset of the recession, only 19 states met the recommended funding level, which is one year of reserves equal to the highest amount of unemployment insurance paid out during prior recessions.

Financing experts suggest that states build up their jobless benefit coffers during strong economic times so that they can draw from them during downturns.

Federal and state governments collect money for unemployment benefits by taxing employers on a small portion of their employee wages. While total wages and weekly jobless benefit levels have been rising, governments haven't increased the taxable base wages at the same pace.

[Fox McCloud]

A lot of states ran out quite a long time ago....I must admit though, I'm a bit surprised Ohio made it into the top 5...at the same time too, we have one of the most hostile and unfriendly environments for businesses in the entire nation...

[HOLLYWOOD]

California is Hemorrhaging and taking the nation down with it.

http://www.ronpaulforums.com/showthread.php?t=239460

California spending 100 MILLION PER DAY on unemployment insurance State and Local Budget Crisis Black Swan – California paying out $100 Million per Day in Unemployment Insurance. Detroit’s Shrinking Population Crushes Revenues. The Employment Situation at a Micro Level.


Posted by mybudget360 (http://www.mybudget360.com/author/mybudget360/) in Employment (http://www.mybudget360.com/category/employment/), black swan (http://www.mybudget360.com/category/black-swan/), debt (http://www.mybudget360.com/category/debt/), economy (http://www.mybudget360.com/category/economy/), government (http://www.mybudget360.com/category/government/), unemployment (http://www.mybudget360.com/category/unemployment/), unemployment insurance (http://www.mybudget360.com/category/unemployment-insurance/)
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One stunning statistic that hit this week regards California’s unemployment insurance claims being paid out. California is paying out some $100 million per day in unemployment benefits. I’m not sure if I would call it a “benefit” but more as a buffer to get by. In reality if we really want to get a pulse on what Americans (http://www.mybudget360.com/how-much-does-the-average-american-make-breaking-down-the-us-household-income-numbers/) are facing in terms of the recession unemployment claims and benefits are a good place to start. The unemployment rate as we all know can be fudged in many ways. If you work 10 hours at Wal-Mart but want full-time work then you are counted as employed in terms of the headline rate. This isn’t a big deal when a small part of the country is working part-time for economic reasons but this group is enormous (9 million to be exact). The headline rate is 9.7 percent but add in this group and we are up to 16.9 percent. And people seeking unemployment rarely fudge numbers because they need the money and they have to report their status every two weeks to continue receiving claims.
If we look at California for example, the numbers show anything but a recovery:
http://www.mybudget360.com/wp-content/uploads/2010/04/unemployment-insurance-fund.png (http://www.mybudget360.com/wp-content/uploads/2010/04/unemployment-insurance-fund.png)
Source: California EDD
Even with 99 weeks of unemployment insurance between federal and state, extensions, and other emergency support programs we have a sizeable number of people reaching the end of their rope. This shows how pervasive and deep this economic crisis has hit average Americans (http://www.mybudget360.com/how-much-does-the-average-american-make-breaking-down-the-us-household-income-numbers/). I tend to look at unemployment insurance payouts as a good measure to see how quickly the economy actually recovers. After all, if after two weeks you find a job, you would expect that less would be coming out of the fund when it comes to renewing your benefits. So it is very sensitive to market changes in the employment market. We have so many market indicators from consumer confidence to home sales but in terms of employment, I’d be following the unemployment insurance payouts very closely to see when things actually take a turn.
And one unique aspect (there are many) about this recession is the length of time people have been out of work:
http://www.mybudget360.com/wp-content/uploads/2010/04/unemployment-27-weeks-and-more.png (http://www.mybudget360.com/wp-content/uploads/2010/04/unemployment-27-weeks-and-more.png)
Of the 15 million officially unemployed people, nearly 7 million have been unemployed for 27 weeks or more. The problem when people remain without work this long is that they typically will be shifting into other industries. Think of a mortgage broker that now needs to retool for another industry that is hiring (i.e., health care). Congress is currently debating whether to extend unemployment benefits but the fact that we are even having this debate with 99 weeks of unemployment insurance in some states is troubling in itself.
In many places like Los Angeles and Detroit, you are seeing massive deficits in their budget but for different reasons. California relied heavily on the housing bubble (http://www.mybudget360.com/the-miseducation-of-the-california-housing-market-5-reasons-why-california-housing-still-has-3-years-before-hitting-a-bottom/). States that really built an entire tax collecting expectation around real estate are being harmed deeply:
The Real Estate Foursome
California
Nevada
Arizona
Florida
The private sector responded quicker. Massive layoffs and crashing home values. Yet state and local governments are still expecting revenues at higher levels. Even if they don’t expect it, they haven’t done anything to the level necessary of balancing their budgets. Many middle class Americans (http://www.mybudget360.com/middle-class-2010-banks-health-care-wall-street-debt/) will probably be shocked to see their local tax rates blossom even as they see their wages cut.
The other side of the budget issue has ex-manufacturing states like Michigan and Ohio that are struggling from the economic downturn but for other reasons. People forget that Detroit for example has had a crashing housing market for over 15 years. This has to do with the dismantling of our manufacturing base but also people leaving the city:

http://www.mybudget360.com/wp-content/uploads/2010/04/population-of-detroit.png (http://www.mybudget360.com/wp-content/uploads/2010/04/population-of-detroit.png)
Once the fifth largest city in the U.S. Detroit has lost half its population in 60 years (http://www.mybudget360.com/the-long-lost-city-of-detroit-the-economic-and-financial-pain-of-motor-city-how-detroit-went-from-18-million-to-912000-residents-289-percent-unemployment/). This has caused deep ramifications in budgets but also in how the city deals with problems. For example, there is an effort to bulldoze parts of the city to reflect the actual services available and the new population dynamics. Drastic measures indeed but this is what is happening.
So dwindling revenues are another important aspect of the budget crisis. Looking at local governments because many depend on tax collections for revenues, things are still in bad shape. So if revenues are not up to par, then it is merely a reflection of the weak economy. These are indicators that prove to be better at giving the “feel” of the recession because simply looking at Wall Street, you would think that we would all be partying with a 70+ percent stock market rally (http://www.mybudget360.com/top-1-percent-control-42-percent-of-financial-wealth-in-the-us-how-average-americans-are-lured-into-debt-servitude-by-promises-of-mega-wealth/). But Wall Street does not reflect Main Street and they only care about the worker on the street when it comes to taking their money for bailouts (http://www.mybudget360.com/top-1-percent-control-42-percent-of-financial-wealth-in-the-us-how-average-americans-are-lured-into-debt-servitude-by-promises-of-mega-wealth/) of their horrible business decisions of the past decade.
__________________
Quote:
Why then, since the slave is happy, and happiness is the great object of all animated creation, should we endeavor to disturb his contentment by infusing into his mind a vain and indefinite desire for liberty—a something which he cannot comprehend, and which must inevitably dry up the very sources of his happiness?
…

[gls]

Good thing the Federal government has a never-ending supply of "money" to "loan" out. :rolleyes:

[rancher89]

Just how far down this rabbit hole do we have to go before the sides start falling in?

[Dunedain]

Once unemployment benefits disappear the unemployment rate will start to fall as those leaching off the system will quickly find suitable work.

[JK/SEA]

4300 state workers to be layed off in Washington State. Just announced.

[Number19]

As soon as the census canvasing is complete, several hundred thousand temps are going to be laid off. I read one blurb that stated 700,000 temps are being hired. This seems high, but for certain there will be a lot of people hitting the unemployment lines later in the year.

[LibertyWorker]

Once unemployment benefits disappear the unemployment rate will start to fall as those leaching off the system will quickly find suitable work.


This system is the leech. Not the people

If you collect unemployment benefits you just getting back some of what was stolen from you.

[Mike4Freedom]

They will probably stop the a lot of the unemployment benefits about a year before the 2012 election so that unemployment dips down to 8 or 9% just for enough time to give Obama the election.

This is what I am afraid of.

[Number19]

As reported by Rush Limbaugh, today the Obama administration said there wasn't enough firm data just yet to announce the recession was officially over. Limbaugh went out on the limb and predicted that enough data would be in by September or early October for a formal announcement that the economy had recovered and the nation was out of the recession.

[LittleLightShining]

Once unemployment benefits disappear the unemployment rate will start to fall as those leaching off the system will quickly find suitable work.Not if the states borrow money from the feds-- which is exactly what they're doing in VT.

[Dreamofunity]

Florida's has been broke since August I believe, and started borrowing from the Federal Government. We only pay out $275 max I believe too, other states like Mass. pay close to $700.