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Washington Gridlock Could Mean 100,000 Long-Term Unemployed in State Will Soon Lose Benefits

| December 22, 2011
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(AP) About 1.1 million unemployed Californians will be affected if Congress and President Barack Obama fail to break their political deadlock before the end of the year, state officials said Wednesday.

Some jobless residents will begin losing unemployment extensions as early as next month if Congress does not extend benefits, according to the California Employment Development Department.

For about 100,000 people who are in their final federal extension known as FED-ED, their benefits will immediately stop after the first week of January. And people who are at or near the end of their benefits will no longer be able to file for extensions.

California provides up to 26 weeks of benefits, but the federal government has allowed extensions up to 99 weeks.

For about 100,000 people who are in their final federal extension known as FED-ED, their benefits will immediately stop after the first week of January.

The state, which administers unemployment insurance benefits, provides a maximum weekly benefit of $450 with an average unemployment check of $300.

Department Director Pam Harris said the state is doing all it can to keep people informed. While California’s unemployment rate has been creeping lower in recent months, its jobless rate of 11.3 percent remains the second highest in the nation behind Nevada.

“We know unemployment is a stressful experience at any time, and we understand that the uncertainty surrounding the benefit extensions adds to that stress, especially during the holiday season,” Harris said in a statement.

The House of Representatives on Tuesday rejected legislation passed in the Senate to extend a payroll tax cut and jobless benefits for two months, as the president criticized Republicans for threatening higher taxes on American workers. House Republicans want the provisions extended for a full year.

Without any action by Congress, millions of people would lose unemployment benefits, and starting in January, Social Security payroll taxes will go up almost $20 a week for a worker making a $50,000 salary.

Even though 1.1 million Californians are filing unemployment claims, about 2 million people are classified as unemployed, meaning they are looking but can’t find work. About 45 percent of them have been unemployed for six months or longer.

“When you take away benefits, you’re taking it away from those most in need of them,” said Employment Development Department spokeswoman Loree Levy.

As of Dec. 19, some 585,000 unemployed workers in California had run out of all available benefits.

California has been borrowing heavily from the federal government to pay benefits. The state’s unemployment insurance trust fund, which is funded in part by employer contributions, is running a $10.1 billion deficit due to the high number of claims and California’s outdated funding formula.

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