U.S. unemployment is so bad right now that even the unemployment benefits system has broken down.Already, fully half of state unemployment benefit programs have already run out of funds. 80% could be broke within two years.
Washington Post: Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.
Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of labour estimates, 40 state funds will have been emptied by the jobless tsunami.
“There’s immense pressure, and it’s got to be faced,” said Indiana state Rep. David Niezgodski (D), a sponsor of a bill that addressed the gaps in Indiana’s unemployment program. “Our system was absolutely broke.”
What does it mean? Taxes.
State unemployment-compensation funds are separated from general budgets, so when there is a shortfall, only two primary solutions are typically considered — either cut the benefit or raise the payroll tax.
Industry and business groups often lobby against raising the payroll tax on employers, while unions and other worker groups protest benefit cuts.
Business Insider Emails & Alerts
Site highlights each day to your inbox.