Sequester Causes Reduction in Unemployment Checks

Image via Flickr by JasonLangheine

For anyone having trouble finding a job, federal budget cuts will soon become a big problem.

During the first 26 weeks of unemployment, benefits come directly from the state. That should mean that the sequester won’t affect unemployment benefits during that time.

After 26 weeks, though, benefits come from federal unemployment insurance. Federal assistance can typically last up to 47 weeks.

The amount of money that the unemployed receive, however, will fall significantly. How it affects them will depend on which state they live in because the states control how federal funds are used.

Some states recognized this issue as soon as sequestration occurred. To prevent huge drops in unemployment benefits, those states began scaling back payments. Doing so certainly upset families struggling to make ends meet, but at least they get to avoid the painful experience of those living in states that didn’t prepare for the reality of budget cuts.

Maryland residents, for instance, will get a big shock when they see their benefits suddenly slashed at the end of June. The state says that it hasn’t been able to introduce cuts more slowly because it had to retrain its staff and reprogram its computers.

Overall, each unemployed person can expect to lose about $450. But that’s an average that doesn’t accurately represent the difficulty that certain families face.

Twelve states have decided to use a grandfathering approach that cuts benefits for first-time applicants. Some of those states have created a four-tier system. The amount that you lose depends on where you fall in that system. New Mexico residents who fall in the second tier could lose 25 percent of their unemployment benefits.

But at least the people in New Mexico don’t have North Carolina’s self-imposed problems. Recent changes to that state’s unemployment system make it ineligible for residents to get federal benefits.

That’s a rough deal for anyone looking for a job in this economy.

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