States Cut Unemployment Benefits
States have spent money they do not have to pay unemployment benefits. At the beginning of 2012 states owe the federal government roughly $46 billion that they borrowed to pay unemployment programs in recent years. This has spurred many states to reevaluate their unemployment programs. Michigan, which is $4 billion in debt to the federal government, signed a law that went into effect this year that contained the following provisions:

  • Decrease the number of state paid weeks of unemployment from 26 to just 20.

  • After receiving 10 weeks of benefits, candidates must take any available job that pays at least 120% of their weekly benefits regardless of how much they had been making in their previous position.
Florida has followed suit and passed a law of their own regarding unemployment which stipulates the following:

  • The number of weeks of unemployment benefits received will be correlated to the unemployment rate. Higher rates result in more benefits and lower rates result in fewer benefits with a maximum of 23 weeks and a minimum of 12 weeks.

  • Additionally, an initial skills assessment must be taken and, once a person starts collecting benefits, that person must submit reports that show they've either reported to a state career office or contacted at least five employers.

These moves by the states will result in a more aggressive pursuit of new jobs by those who find unemployment payments less bountiful. This will add to the upward momentum already seen in the job market.
Posted on Friday, January 6, 2012 @ 8:41 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.