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“The Largest Share Of The Burden”: Sequestration Forces Cuts To Long-Term Unemployment Benefits For Millions

There’s plenty of talk about how sequestration is hurting some workers, like the government employees facing unpaid furlough days this year. But the cuts are hitting unemployed Americans hard as well, according to one employment rights organization.

A new analysis shows the federal Emergency Unemployment Compensation program – which provides benefits to long-term unemployed Americans – will be cut by $2.4 billion, impacting millions of unemployed Americans. The National Employment Law Project analysis finds that the EUC program provides an average weekly benefit of $289 before sequestration reductions. Sequestration will take $43, or nearly 15 percent, out of that average weekly check.

However, the monthly benefit cuts will be much steeper in some states, inching above $200 or even $300 per month. Among the states taking the largest chunk out of all long-term unemployed workers’ checks is Maryland, which starting June 30 cut weekly benefits to all recipients by 22.2 percent, or about $72 out of that state’s average benefit of $325. New Jersey also cut benefits by 22.2 percent, or $85 from its average benefit, as of June 30. Montana, meanwhile, cut benefits by 19.6 percent, or $51 per week, starting on May 5.

“[I]t is the workers who have benefited least from the economic recovery who are bearing the largest share of the burden of these domestic sequester reductions,” said the National Employment Law Project in a statement.

States administer their own unemployment insurance programs, providing benefits for up to 26 weeks per worker in most states. Once workers hit that point, they can start to draw on federal programs for long-term unemployed, which provides up to 47 additional weeks of federal benefits.

The reason for the differences in state cuts lies in when states started making the cuts to the federal benefit payments. Sequestration forced cuts to that EUC program, but the government left it up to the states to determine how and when to make those cuts.

In a March advisory to state workforce agencies, the Labor Department directed states to implement reductions quickly, but not every state did.

“The preferred method was the one that most states opted for, which was just to implement as quickly as possible and spread the reduction out over the entire population of individuals who were collecting EUC benefits,” explains George Wentworth, senior staff attorney for the NELP. “The later that the states implemented, that percentage [taken out of checks] increased.”

Though some states cut benefits for all workers, others chose different routes. Some implemented “non-paid weeks” for claimants, while others shortened the number of weeks that the unemployed can receive benefits. A few only cut benefits to new EUC beneficiaries.

Two haven’t done anything yet to make up the shortfall resulting from the sequester. Louisiana and Nevada have yet to cut benefits, which may mean that when they do, their cuts will be all the steeper.

North Carolina’s EUC program ended at the end of June, but those cuts were unrelated to sequestration. That state cut its weekly unemployment benefits, making it ineligible for federal EUC benefits.

While benefits are cut, long-term unemployment remains a persistent problem. Currently, nearly 4.4 million Americans have been unemployed for 27 weeks or longer. That is down significantly from an early 2010 peak of 6.7 million but is far higher than the levels of around 1.1 million seen in the mid-2000s.

 

By: Danielle Kurtzleben, U. S. News and World Report, July 3, 2013

July 8, 2013 Posted by | Sequester, Sequestration | , , , , , , | Leave a comment

“Corporate Tax Subsidies Are Out of Control”: Want Jobs Back, Axe Business Tax Subsidies

It’s no secret that state and local government employment has nosedived during the current economic crisis. According to the St. Louis Fed, total local government employment has declined from 14,481,000 when the recession began in December 2007 to 14,033,000 in March. State government employment has fallen from 5,139,000 to 5,050,000 over the same period, for a total loss of 537,000 state and local government jobs.

This starkly illustrates the opportunity cost of out-of-control use of subsidies to business at the state and local level. In my academic work, I estimated these to be $48.8 billion a year in 1996, of which $26.4 billion was for investment attraction, and almost $70 billion in 2005, of which $46.8 billion was aimed specifically at investment attraction.

Many critics of investment incentives, such as Alan Peters and Peter Fisher, argue that the money would generally be better spent on education and infrastructure, policies that benefit businesses generally as well as the entire population. My cost estimates show just how true this is.

Total business subsidies could be used to hire 1.4 million government workers at $50,000 per year in salary and benefits. Instead, what we have seen in state after state is that there have been sharp cuts to these very areas, even extending to such economic development crown jewels as the state university systems in California and North Carolina, among others.

This is doubly short-sighted: It weakens the very factors that make a state or locality attractive to investment in the first place, and the state/local economic development subsidies largely cancel each other out with little net effect on the overall location of investment in the country. From the point of view of the country as a whole, then, most of these subsidies are a waste of money. But changing the way the economic development game is played will require tremendous effort at the local, state, and federal government level.

 

By: Kenneth Thomas, U. S. News and World Report, April 10, 2013

April 11, 2013 Posted by | Corporations, Public Employees | , , , , , , , | Leave a comment

   

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