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Austerity American Style Part 12 - The Sequester Act IV


Sequester Hits the Long-Term Unemployed

By Catherine Rampbell
NY Times Economix
July 2, 2013

Sunday was the five-year anniversary of the EMERGENCY UNEMPLOYMENT COMPENSATION program, a federal program signed into law by President George W. Bush that initially added 13 weeks of unemployment benefits to the standard 26 weeks states already offered eligible jobless workers. The 13 additional weeks of benefits were intended to be temporary, but as the recession worsened, Congress decided to keep the program going and even lengthened the amount of time that workers could receive benefits. For a while workers could receive as many as 99 weeks in some states, the longest duration of jobless benefits on record.

Those benefits have been pared back over the last year and a half, though, and are being cut more severely now as a result of the across-the-board spending cuts known as the sequester.

A new REPORT from the National Employment Law Project calculates exactly how much: Of the more than $80 billion in automatic budget cuts that must occur between March 1 and Sept. 30, about $2.4 billion is being slashed from the federal emergency unemployment benefits program, says NELP, a labor-oriented research and advocacy group.

The organization estimates that upward of 3.8 million unemployed workers will ultimately be affected by the cuts. The average weekly benefit check of $289 is being cut by $43, or about 15 percent.

“It is the workers who have benefited least from the economic recovery who are bearing the largest share of the burden of the sequester,” the organization said in a statement.

Almost every state has carried out the federally mandated cuts to its unemployment benefits at this point, but many waited until recently to do so. The longer the states took to put the cuts into effect, the sharper the reduction in each remaining weekly benefit check.

For example, the 20 states that cut their benefits starting on March 31 or April 6 trimmed 10.7 percent from each weekly benefit check, whereas Maryland and New Jersey started decreasing benefits on June 30, which required slashing all future weekly checks by 22.2 percent to achieve the total required savings.

The advocacy group has put together a table showing whats happening in each state.

Note that there is one outlier in North Carolina, which on Monday ended its participation in the federal Emergency Unemployment Compensation program altogether. ThatҒs for reasons unrelated to the sequester; basically North Carolina reduced its state-level jobless benefits (which workers go on before qualifying for the later tier of Emergency Unemployment Compensation benefits) by so much that it is no longer legally eligible for the federal extended benefits.

The National Employment Law Project estimated that North Carolina, which has the fifth-highest unemployment rate in the country, is cutting off federal benefits for an estimated 70,000 workers.



Drastic Cuts to Long-Term Unemployment Assistance Cause Concerns

July 12, 2013

When sequestration policy went into effect July 1, emergency federal unemployment benefits for the long-term jobless were cut, affecting millions of Americans. Also, a number of states scaled back their unemployment benefits to lows not witnessed since the federal government established the program in 1935, USA Today REPORTED.

“These are historic and disturbing cuts,” said Mike Leachman with the Center on Budget and Policy Priorities. “When the next recession hits, the unemployment system of the country is going to be significantly less effective. And it means the next recession will be deeper than it otherwise would have been.”

Last week, North Carolina halted benefits for tens of thousands of residents and reduced the time jobless people can collect such assistance. This was in large part because the state still owes $2.5 billion on a loan from the federal government, which it used to buoy its unemployment assistance program. In addition, North Carolina is the first state to end its participation in the federal emergency unemployment benefits program, which kicks in when an unemployed person has exhausted all of his or her state benefits. Consequently, about 80,000 North Carolinans lost their supplemental federal monies.

Georgia has also made changes to its unemployment plan; its jobless benefits now run out after 18 weeks compared to its previous 26-week limit. Five other states have lowered their maximums to 19 or 20 weeks.

According to CNBC, some states have also cut their payment benefit amounts. New Jersey and Maryland, for example, cut benefits the most, by 22.2 percent, followed by Montana (19.6 percent), Connecticut (19.2 percent), and Arizona and Illinois (16.8 percent). Texas, which has an unemployment rate below the national average at 6.5 percent, trimmed 10.2 percent.

Currently, federal emergency unemployment benefits are helping to lessen the impact of the state’s new cuts. The duration of that aid is based on each state’s jobless rate; in those with the lowest, 14 weeks is the standard. However, the program is set to expire at year’s end and Congress may not opt to extend it.

In addition, as of July 1, under sequestration rules, the federal government cut overall monies for the long-term unemployed by about $2.4 billion, approximately a 15 percent reduction, U.S. News & World Report explained. The average weekly benefit of $289 dropped by $43 due to sequestration. However, some states experienced even more drastic reductions; for example, unemployment compensation fell 22.2 percent in New Jersey, amounting to about an $85 reduction from the typical $382 amount.

Against a backdrop of diminished unemployment benefits, long-term joblessness persists, USA Today noted. Federal numbers show nearly one-third (4.3 million) of the nation’s 11.8 million jobless have been unemployed for 27 weeks or longer. While down from the high of 6.7 million in 2010, the number remains well above the 1.1 million unemployed during the pre-recession period in the mid-2000s, according to U.S. News & World Report.



U.S. budget cuts hitting long-term unemployed hard

By Paige Gance, additional reporting by Lucia Mutikani; Editing by Dan Burns and Leslie Gevirtz
August 13, 2013

Phyllis Kennedy is facing a bleak future. U.S. government budget tightening has slashed her weekly unemployment check by more than a fifth, and her prospects of finding a job are grim after over a year of unemployment.

Kennedy, 57, from Little Falls, New Jersey, had her $380 weekly unemployment check cut by $85 at the end of June. Just when she was coming to terms with the blow, she learned her benefits would end altogether in three weeks, more than two months earlier than she had anticipated.

She is among the 4.3 million in the United States who are officially counted as being unemployed for more than six months. According to the U.S. Labor Department, only 37 percent of that group received benefits in July compared with a peak of 93 percent in February 2010 when there were 6.2 million long-term unemployed.

The economy’s slow recovery and federal and state cuts to unemployment insurance programs have slashed the numbers receiving benefits.

“For people that are on their own, like me, a cut like this is devastating,” said Kennedy, who lost her job as a mental health center administrator, and a $32,000 salary with it, more than a year ago. “I have very little emergency money left.”

Thousands of miles away in Las Vegas, John Payne is also reeling from benefit cuts, which reduced his weekly check by a third to about $250. The 55-year-old commercial glass installer has not had regular work since late 2009.

“Not even when I moved out of the house as a teenager did I struggle this much,” said Payne, who plugs the gaps between sporadic construction projects with unemployment insurance. “I was stunned. I knew the cuts were coming, but I never imagined it would be that much.”

Benefit reductions like those suffered by Kennedy and Payne, part of the federal budget cuts known as sequester, have hammered those who have struggled the most to find jobs in this listless recovery.

The $2.4 billion cut in emergency unemployment benefits, which began to go into effect on March 1, are part of a wider push to reduce the federal government’s budget deficit.


Even before sequester, benefits had dropped in most states as jobless rates fell below levels that allow the jobless to claim for additional weeks. In July, the unemployment rate dropped to a post-recession low of 7.4 percent.

Before the 2007-09 recession states would pay at least 26 weeks of benefits. Since 2008, federal emergency benefits have provided additional weeks of aid based on each state’s unemployment rate.

States can receive up to four tiers of these benefits, with all tiers except the first requiring a certain level of unemployment in the state.

Only three states currently qualify for the 10 weeks of tier four emergency benefits, for a total of 47 weeks: Illinois, Mississippi and Nevada. On Sunday, California and Rhode Island became the most recent states whose residents will lose access to those extra weeks, meaning more than 100,000 of the long-term jobless population will soon lose assistance.

Emergency benefits offered a maximum of 53 weeks before Congress scaled back the program last year. The program will expire on December 28 without a renewal by Congress, leaving only state benefits.

New Jersey’s average unemployment rate fell to 8.7 percent in June, below the tier four threshold, so Kennedy will not receive the extra 10 weeks of benefits once her already trimmed checks end.

“I might have to sell my home,” said Kennedy, who has a $1,200 monthly mortgage payment and owes $115,000 on a house worth about $250,000.

Kennedy said she has considered moving to another state where the cost of living is cheaper. “It would kill me to leave my children, but I might just be pushed out,” she added.

Her three grown children also live in New Jersey.


Though the recession ended four years ago, the pace of economic growth has been too slow to generate sufficient employment, leaving millions of workers unable to find jobs before their benefits run out.

Adding to the squeeze, eight states have cut their weeks of state benefits to between 18 and 25 from the standard 26.

North Carolina not only reduced the initial number of weeks residents could receive aid to 20, but slashed state jobless benefit checks by more than one-third.

This violated a provision of emergency unemployment aid that prohibits states from reducing average weekly benefits, according to the Department of Labor.

After June 28, emergency benefits ended in North Carolina and 65,000 immediately lost assistance. The move allows the state to pay back $2.6 billion to the federal government three years earlier, said North Carolina commerce department spokesman Josh Ellis, sparing businesses from higher unemployment insurance taxes.


In Nevada, where the unemployment rate is 9.6 percent, Payne is contemplating moving to northern California, but the lack of money makes it a challenge. He has been unable to fix his car and often takes public transport, to go to temporary jobs, while carrying heavy tools.

“My ability to move to northern California is a pipe dream because I don’t even have the money for that,” said Payne.

Sharon Williams of Newark, New Jersey is also feeling the pinch after the 22 percent cut to her weekly unemployment check.

“I don’t sleep well at night because I don’t know what utility will get shut off next,” said the 62-year-old licensed practical nurse.

Her license is limited to New Jersey and she did not update it with currently required skills.

Lisha Fields, 36, a single mom laid off a year ago after 10 years with Verizon Wireless in Chicago, has only received minimum wage job offers that amount to less than her unemployment benefits. Accounting for child care costs, these offers are not feasible, she said.

The risk is that the longer she and the others remain unemployed, the less the chances of them finding jobs.

A study by the Boston Federal Reserve Bank released earlier this year found that callback rates dropped precipitously for those unemployed longer than half a year.

“There’s this concern that you have all these workers who might become a permanent class of the unemployed,” said Kory Kroft, a professor of economics at the University of Toronto.

“People think we’re unemployed because we want to be,” Fields said. “No.”


Austerity American Style
[PART 1] - Ending The Safety Net
[PART 2] - Enough Is Enough
[PART 3] - Big, Bad Businessmen
[PART 4] - Big, Bad Banks
[PART 5] - Selling Out The Public
[PART 6] - No Jobs Plan
[PART 7] - Big, Bad Cronies
[PART 8] - Red-State Model
[PART 9] - Inflicting Pain
[PART 10] - The Grand Betrayal
[PART 11] - The Sequester ACT III
[PART 12] - The Sequester ACT IV
[PART 13] - Austerity Kills

Posted by Elvis on 07/14/13 •
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