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States Are Cutting Unemployment Benefits

From a seriously ticked Associated Press:

States shorten duration for unemployment benefits

By Kevin Freking [sic], Associated Press Sun May 22, 2011

WASHINGTON – Some of the states that have drained their unemployment insurance funds are cutting the number of weeks that a laid-off worker can count on those benefits. Legislators are trying to limit tax increases for businesses to replenish the pool and are hoping the federal government keeps stepping in when the economy slumps.

Michigan, Missouri and Arkansas recently reduced the maximum number of weeks that the jobless can get state unemployment benefits. Florida is on the verge of doing so. Unemployment in those states ranges from 7.8 percent in Arkansas to 11.1 percent in Florida…

About 30 states borrowed more than $44 billion from the federal government to continue payments to laid-off workers. Many states hastened the insolvency of their funds by keeping balances at historically low levels going into the downturn.

The burden of replenishing the funds and paying off the loans will fall primarily on businesses through higher taxes, but the benefit cuts are an effort to limit the tax increases.

We have often warned that extending jobless benefits will just cause taxes to go up on the businesses that hire people. Which, in turn, will mean fewer new jobs. But somehow that is a detail our media watchdogs has hitherto studiously avoided mentioning

States usually provide up to 26 weeks of benefits to laid-off workers. Michigan and Missouri have cut that to a maximum 20 weeks. Arkansas went to 25…

Employers pay both state and federal taxes for unemployment insurance. States collect the taxes that pay for basic benefits. The federal taxes help pay for administering the program and providing the federal government’s share of extended benefits. State tax collections will have increased about 44 percent since 2009, according to the Department of Labor.

And they wonder why more companies aren’t hiring?

Still, as a percentage of wages paid, unemployment insurance taxes are at historically low levels, less than 1 percent. When the unemployment insurance program began in 1938, the tax rate for unemployment insurance averaged about 2.7 percent of wages.

Nevertheless, higher taxes in tough economic times are challenging businesses. States apply their highest tax rates to those industries with the most worker turnover. Those often are the same industries that are hardest hit by recession, such as manufacturers.

In Florida, the minimum tax that is applied to businesses with low employee turnover went up from about $25 per employee to about $72 this year. The maximum tax for businesses with high turnover remained at $378 per employee

And what companies are going to want to take on new workers if they have to pay this additional tax?

It is the epitome of a vicious cycle.

This article was posted by Steve on Monday, May 23rd, 2011. Comments are currently closed.

7 Responses to “States Are Cutting Unemployment Benefits”

  1. proreason says:

    It’s so unfair that the states don’t have printing presses.

  2. Rusty Shackleford says:

    Socialists suffer from the perpetual delusion that there “will always be money” and that they can continually take it from those who have it. But they never seem to fully grasp simple cause & effect. Seeming masters at “stick & carrot”, they inexplicably fail to grasp same when it comes to taxes and hiring. It’s as if they focus on only one aspect of anything; That which tweaks them emotionally or that which somehow satisfies their deepest wishes. Not thinking things through is the stock-in-trade of socialists.

  3. tranquil.night says:

    Crap, this isn’t good. According to Nancy Pelosi, extended unemployment benefits are the most important thing fuelling economic growth. APOCALYPSE NOW!

  4. Right of the People says:

    Even a died in the wool liberal like John Lennon realized taxing the rich unfairly was a bad idea.

    One, two, three, four…
    One, two, (one, two, three, four!)

    Let me tell you how it will be;
    There’s one for you, nineteen for me.
    ‘Cause I’m the taxman,
    Yeah, I’m the taxman.

    Should five per cent appear too small,
    Be thankful I don’t take it all.
    ‘Cause I’m the taxman,
    Yeah, I’m the taxman.

    (if you drive a car, car;) – I’ll tax the street;
    (if you try to sit, sit;) – I’ll tax your seat;
    (if you get too cold, cold;) – I’ll tax the heat;
    (if you take a walk, walk;) – I’ll tax your feet.


    ‘Cause I’m the taxman,
    Yeah, I’m the taxman.

    Don’t ask me what I want it for, (ah-ah, mister Wilson)
    If you don’t want to pay some more. (ah-ah, mister heath)
    ‘Cause I’m the taxman,
    Yeah, I’m the taxman.

    Now my advice for those who die, (taxman)
    Declare the pennies on your eyes. (taxman)
    ‘Cause I’m the taxman,
    Yeah, I’m the taxman.

    And you’re working for no one but me.


  5. Astravogel says:

    …and Arkansas just cut the sales
    tax on food again. Imagine that!

    Comes from a Debit Card spending
    system. A reaction to Reconstruction…

  6. Not so fast says:

    How’s that Hopey Changey thing workin’ out for ya?

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