Nineteen states are nearly insolvent or marginally solvent.
When the unemployment office is in trouble we’re really screwed.
CNN.Money: State unemployment insurance trust funds are rapidly running out of money amid soaring job losses.
This is prompting state officials to consider raising employer taxes or curtailing benefits, while forcing them to borrow from the federal government to cover claims.
“Some states didn’t have adequate reserves built up,” said Andrew Stettner, deputy director of the National Employment Law Project. “They are having significant problems paying out the increased number of benefits.”
The number of people collecting state unemployment benefits hit a 25-year high of 3.84 million, on a seasonally adjusted basis, the labour Department said Thursday. The report comes a day before the department is expected to announce that 200,000 jobs were lost in October, pushing the unemployment rate up to 6.3% from 6.1%.
With companies unveiling mass layoffs almost daily, states are likely to see further strains on their trust funds. This comes at a time when the weakening economy is already putting great stress on governments and employers alike.
The trust funds are financed through unemployment insurance taxes levied on businesses. States must pay out the claims promised under the law, even if they have to borrow the funds from the feds.
The trust funds of five states are insolvent – meaning they have reserves of three months or less – while another eight state funds are nearly insolvent with reserves of four to six months, according to the National Employment Law Project. Six other states don’t have enough money to cover a year of payments.
Five states that aren’t solvent, meaning they have funds to cover three months or less:
* Michigan, Indiana, New York, South Carolina, Ohio
Eight states that are nearly insolvent, meaning that they have enough to cover four to six months of average payments:
*New Jersey, California, Kentucky, Missouri, Wisconsin, North Carolina, Rhode Island, Arkansas
Six states are marginally solvent, meaning they’ve got seven to eleven months worth of payments:
*Pennsylvania, Minnesota, Idaho, Illinois, Connecticut, Massachusetts
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