Wednesday, September 2nd, 2015

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Is Your State Out of Money to Pay Unemployment?

One by one state unemployment agencies are going bankrupt. Of course, with so many people out of work and a record number of people collecting unemployment benefits it should be no surprise. So far, there are 25 states that have hit the bottom of the unemployment barrel.

What does a state do when it runs out of money?
It borrows from the (already broke) federal government.
Each state has its own unemployment system, this means that they can set their own taxes and decide their own benefit levels. In fact, some states pay twice as much as other states. No matter where you live, if you’re unemployed you have to get by on whatever they give you. Check out this map to see where your state falls on the unemployment payout spectrum.
Some states, such as Indiana, Florida, Nevada and California are borrowing billions. With unemployment numbers not letting up any time soon, states are not going to be paying back any money, instead, they are going to be borrowing more. This means they are going to have to pay interest—lots and lots of interest—hundreds of millions of dollars in interest. Paying all of this interest means that states won’t have money for other things, like fixing roads, prosecuting criminals, and snow removal, the basic things that allow the citizens in a state to function.
The only way for states to start digging themselves out of the hole is to raise taxes and/or cut benefits. . Raising taxes during a recession is risky; businesses who can’t afford to pay higher taxes may be forced to close their doors, leaving more unemployed people and fewer jobs. In addition, higher taxes can prevent companies from moving to, or doing business, in your state. Cutting benefits is even worse; it means leaving desperate people with no money to live.
Ideally, states would accumulate reserves during the good times, money they could pull from when they needed it in the bad times. However, many states didn’t do that, and now, they’re broke.
Worried about what’s happening in your state? Check this list.


One Response to Is Your State Out of Money to Pay Unemployment?

  1. Pingback: How to Get Fired and Still Qualify for Unemployment

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