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States Rolling Back Unemployment Benefits

Arthur Delaney has been the foremost writer on the slow move to cut off unemployment benefits in the states. Multiple states have either passed laws or are in the process of passing laws reducing benefit weeks. The vehicle for this has been to restore extended benefits paid for by the federal government, and in the process to cut the weeks that the states are on the hook for. Missouri, Michigan, Arkansas and Florida have gone down this path, and Pennsylvania and Wisconsin are not far behind. The temporary aid gets extended while the permanent benefits get cut. After the end of this year, when the temporary aid runs out, the result is an unemployment system that’s permanently stingier than before the Great Recession.

The Associated Press picks up on this trend today (remember, the Huffington Post is just a measly aggregator, not an early warning system for the traditional media):

Some of the states that have drained their unemployment insurance funds are cutting the number of weeks that a laid-off worker can count on those benefits. Legislators are trying to limit tax increases for businesses to replenish the pool and are hoping the federal government keeps stepping in when the economy slumps […]

About 30 states borrowed more than $44 billion from the federal government to continue payments to laid-off workers. Many states hastened the insolvency of their funds by keeping balances at historically low levels going into the downturn.

The burden of replenishing the funds and paying off the loans will fall primarily on businesses through higher taxes, but the benefit cuts are an effort to limit the tax increases.

States usually provide up to 26 weeks of benefits to laid-off workers. Michigan and Missouri have cut that to a maximum 20 weeks. Arkansas went to 25.

As AP notes, this is a tax avoidance scheme, to reduce the burden on businesses in the hopes that the federal government will save states from the negative headlines of unemployed workers going homeless or starving to death or committing suicide. Of course, with this current crop of Republicans, there’s no way federal benefits will pick up the slack; they’re likely to run out at the end of December. In fact, there’s a bill in the House to let the states use federal unemployment funds as a kitty to reduce taxes, depriving unemployed workers of the benefits. They cynically call this the JOBS Act.

Democrats have argued for months that the GOP has not brought a “jobs” bill to the floor. But they are expected to continue to oppose H.R. 1745 — the Jobs, Opportunity, Benefits and Services (JOBS) Act — as it would give Republican-controlled states options other than continuing to provide unemployment benefits according to current federal requirements.

During a Ways and Means Committee markup of the bill on May 11, ranking member Sandy Levin (D-Mich.) criticized the bill as something that would “end the guarantee of federal unemployment insurance.”

The House Rules Committee is preparing to approve a rule for the bill, and might do so this week. But the bill was not on House leadership’s schedule for floor consideration as of Monday morning, and given the busy week ahead, it could be pushed off to early June.

State and federal Republicans have the audacity to call reducing unemployment benefits “a fairness thing.” By the beginning of next year, millions of unemployed workers will get kicked off the UI rolls. Millions already have. For the most part, they were simply in the wrong place at the wrong time, happening to be a dispensable worker during a financial crisis and deep recession. The rollback of UI benefits means they will have less hope of getting back on their feet, less opportunity to feed and clothe and house themselves properly until that time comes. It’s a cruel scenario for millions of people. It’s the perfect example of the YOYO society – you’re on your own.

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David Dayen

David Dayen