Unemployed New Yorkers Facing Sudden End to Benefits

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Unemployment figures released today paint a somber picture for job seekers. The nation's unemployment rate climbed to 9.8 percent in November, a seven-month high.

In New York, workers collecting unemployment receive an average of about $300 a week. The number of people receiving those checks will drop sharply after Congress failed to reach an agreement on a bill to extend the emergency benefits program.

Federal lawmakers are divided over whether to approve an extension after already-extended benefits expired Tuesday. That means almost 130,000 New Yorkers could lose their unemployment checks on the week ending this Sunday. In all, 200,000 people could lose their coverage by the end of the year. Cut-offs will continue every week through May 2011 for anyone who’s received checks beyond the standard 26 weeks.

Week Ending

Estimated Exhaustions









Source: NYS Dept of Labor

The transition won’t be quite as abrupt for unemployed workers in Connecticut and New Jersey. Because of a difference in state laws, those collecting benefits in New Jersey and Connecticut would still be eligible for another 20 weeks of extended coverage after their federal benefits expire this week. But people who file for unemployment this week will still only qualify for the standard 26 weeks.

The Cost: Growing Debt for States

For workers who lose their job this week in New York, New Jersey, or Connecticut, they’ll only be eligible for 26 weeks, or about six months. Before the federal programs expired, jobless New Yorkers qualified for more than a year and a half of unemployment benefits with all the federal extensions.

All those weekly checks have added up and drained unemployment funds at the state level. The money for unemployment insurance comes from taxes paid by employers into the Unemployment Insurance Trust Funds. But that’s not covered all the demand. New York is one of 32 states that have had to borrow money from the federal government to cover the benefits. Together, these states have racked up $41 billion in loans.

“Our unemployment insurance trust fund has been insolvent almost two years,” said Colleen Gardner, the New York State Commissioner of Labor. “We're going to owe 3.2 billion dollars starting next year.”

The stimulus bill made these loans to states interest-free, but starting next year, states will need to begin repaying those loans with interest. New Jersey owes approximately $1.75 billion, while Connecticut has borrowed $500 million.

Gardner estimates that it will take New York nine years to repay the loan.  To help make a dent, the state will add an additional .275 surcharge to every workers’ salary.  Those funds will go towards the making an interest payment due on September 30, 2011.

According to analysis by the New York State Comptroller's Office, the state has paid $10.2 billion in unemployment benefits in fiscal year 2009-10 and an additional $6.3 billion in fiscal year 2010-11 through November 30.