Starting this week, benefits for the long-term unemployed — those who have been out of work six months or longer — will be reduced by 59 percent in Nevada, Annie Lowrey of the New York Times reports. That’s because the state waited until the last minute to implement a 5 percent cut under sequestration, necessitating a larger reduction to hit the budget target. The state’s 9.5 percent unemployment rate is the highest in the country.
The state’s average weekly check was about $309. With the 59 percent reduction, they will now be about $127. The cut will last through the end of the month, when a new fiscal year begins in October and sequestration will mean an 8 percent cut to the benefits though the end of the year.
Other states that didn’t wait as long as Nevada still had to make huge cuts. Seven states reduced benefits in May and June from anywhere from 16.8 percent to 22.2 percent. California, the state with the most workers collecting long-term benefits, cut them by 17.7 percent. Some made the reductions early on and only had to reduce checks by about 11 percent.
Meanwhile, North Carolina made such drastic cuts to its benefits that it was dropped from the program altogether.
The United States already has one of the stingiest unemployment insurance programs among its developed peers. The average check for long-term unemployed workers is about $300 a week.
These cuts don’t just hurt unemployed workers, however. They also hurt the economy. The benefit cut in New Jersey is predicted to drain $10.2 million in consumption per week in the state’s economy and $5.1 million in New York. If Congress hadn’t extended the program at the beginning of the year, it would have cost the economy 300,000 jobs. In fact, while opponents of the program argue that the benefits discourage work and foster a culture of laziness, research has found that recipients actually work harder to find a new job than those who aren’t enrolled in the program.
But the odds of getting a new job are daunting for those who have been out of work for more than six months. Those workers get fewer calls for an interview than those who have a job but don’t have the right experience. Being unemployed longer than nine months is the equivalent of losing four years of experience from a résumé in the eyes of a potential employer. Some workers say they have been told outright that employers won’t consider those who have been out of work for a long time.
And sequestration is hurting job seekers in other ways. Workforce training and support programs will take a big hit from the automatic budget cuts, with more than 65 percent planning to reduce the number of people admitted to their programs and 16 percent eliminating some programs altogether. Yet demand for these services has risen sharply among stubbornly high unemployment.