MONEY AND WORK

News from the Progressive Review, providing alternative news and comment for over four decades.

June 4, 2009

STATE UNEMPLOYMENT FUNDS IN DEEP TROUBLE

Pro Publica - Half a million Americans lost their jobs in April, meaning there are now officially 14 million unemployed workers, the highest percentage in 25 years, and the strain on the unemployment system is beginning to show.

A compromise dating back to 1935 means each state has its own unemployment insurance system, with wide latitude to set taxes and benefit levels. As state systems buckle under the weight of skyrocketing unemployment, the fault lines of the current structure have been brought into stark relief.

States have been left on their own to financially founder or prosper, and benefits vary nearly as much as the health of state systems.

Fourteen states have simply run out of money to pay benefits and been forced to borrow from Washington a total of more than $8 billion. That number is almost certain to grow as more states reach the brink. If they are not able to pay that amount back before 2011, which most will not be able to do, they face paying hundreds of millions of dollars in interest. . .

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