States Make ‘Historic and Disturbing Cuts’ to Unemployment Benefits

 North Carolina State Legislative Building. Photograh  by Jayron32,  English Wikipedia

North Carolina drew national attention last week when it dramatically scaled back its unemployment insurance program, ending benefits for tens of thousands and slashing the amount of time that jobless people can collect aid.

But the North Carolina reductions, which drew fierce protests in Raleigh, were just the latest in a string of unprecedented and historic state cuts in unemployment aid. Even as the nation’s unemployment rate remains stubbornly high, other states have cut unemployment benefits to levels not seen since the 1935 Social Security Act created the program.

Since it became the standard decades ago, no state has offered fewer than 26 weeks of benefits — until recently. Georgia’s benefits now run out after 18 weeks, and five other states have set limits of either 19 or 20 weeks. Of the 11.8 million unemployed Americans, 4.3 million have been without work for 27 weeks or longer, according to the most recent federal data.

As the reductions cut more deeply, safety-net advocates worry that state unemployment insurance won’t be sufficient to support jobless workers when the next recession comes.

“These are historic and disturbing cuts,” said Mike Leachman of the left-leaning 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.”

Maurice Emsellem of the National Employment Law Project pointed out that unemployment insurance puts money into the hands of people who are sure to spend it, pumping more money into the economy. “One of the core functions of unemployment benefits is to help support a strong recovery,” Emsellem said. “(Cutting so deeply) undermines the recovery.”

Leading up to the recession, many states cut the employment taxes that support the trust funds, leaving them ill-equipped to deal with the growth in joblessness that followed. Many states borrowed money from the federal government to cover the resulting shortfalls. To pay back that money, many of them have raised taxes on employers, trimmed benefits for recipients, or both.