State unemployment trust funds are in danger of drying up amid a steep hike in unemployment.
A 25-year-high of 3.84 million people nationwide are currently taking advantage of unemployment benefits leaving the coffers of many states nearly bare. Analysts are expecting laid off workers to seek unemployment benefits as the latest unemployment report shows that those without work has increased from 6.1 percent to 6.5 percent. Already this year, 1.2 million jobs have been lost.
Three states unemployment trust funds are currently insolvent - funds that will be depleted in three months or less - while another eight states are nearly insolvent.
Michigan and Ohio, states that economies were suffering well before the current crisis, have been hit especially hard by the economic downturn. In Michigan unemployment is at a nationwide high of 8.7 percent. Ohio has seen its unemployment claims jump by 40 percent over the past year.
All states are legally obligated to pay out on unemployment benefits, so those states facing dwindling trust funds will have to find a way to rebuild their funds. Some states are discussing scaling back on benefits, while others are flirting with raising taxes. If all else fails, those states that cannot meet their obligations will have to look to the federal government to help meet their needs.
Source CNNMoney.com:
|
State unemployment insurance trust funds are rapidly running out of money amid soaring job losses.
This is prompting state officials to consider raising employer taxes or curtailing benefits, while forcing them to borrow from the federal government to cover claims. |