11 States May End Long-Term Unemployment Insurance Due To Sequestration

The federal government’s long-term unemployment insurance program, which became law shortly before the Great Recession began driving the nation’s unemployment rate through the roof, is already facing cuts thanks to the automatic budget cuts that began taking effect on March 1. Sequestration will force 10.7 percent cuts to all benefit checks, costing recipients as much as $450 out of their already-modest benefits before the end of the fiscal year.

Now, though, some states are considering whacking their long-term unemployment insurance programs altogether, since figuring out how to administer the cuts to a program that is run jointly between federal and state governments may prove too complicated. In congressional testimony Tuesday, an official told members of Congress that 11 states may drop their long-term programs to comply with Department of Labor standards, the Huffington Post’s Arthur Delaney reports:

Rich Hobbie, director of the National Association of State Workforce Agencies, said in written testimony during a congressional hearing on Tuesday that workforce agencies are in close communication with the U.S. Department of Labor about sequestration and that 11 might drop the compensation to comply.

“Eleven states are exploring terminating the [Emergency Unemployment Compensation] agreement with USDOL as an implementation option,” Hobbie said.

Eight states have already made substantial cuts to their unemployment insurance programs this year, which has reduced benefits for the long-term unemployed since the federal Emergency Unemployment Compensation program is tied to the limits and restrictions of state programs. It is unclear which 11 states are considering eliminating their programs outright, though Indiana tried earlier this year before the Labor Dept. gave it more time to comply.

The average length of unemployment is 35 weeks, above the general 26-week threshold for being considered “long-term unemployed.” And while budget cuts are making it harder for those workers to receive modest benefits to keep getting by, discrimination is making it nearly impossible for them to return to work, as a recent study showed that even with experience, workers who have been off the job for more than six months have significantly lower call-back rates than those who have been out of work for less time.