33 United States States Short On Funding Unemployment Benefits

With jobless claims at an all time high of 9% majority of United States federal states

have virtually bled their jobless workers benefit funds dry, giving them no choice but to ask the US Federal government for more funds.

Currently, about 33 federal states and the US Virgin Islands dried their funds to borrow to the tune of a whopping total of $38.7 billion to provide a temporary relief to millions of jobless claimants.

As a result of this, federal states are cost cutting non-necessary services to save money. From entertainment like fireworks to catching stray chickens, these cash-strapped cities are getting rid of all kinds of extraneous services.

Debt-ridden California state has borrowed the most, totaling more than $8.4 billion, followed by Michigan and New York, which have loans worth more than $3 billion. Nine other states have borrowed at least $1 billion from the federal government.

"The nation's financing system for jobless benefits is under unprecedented stress," said Andrew Stettner, deputy director of the New York-based advocacy group for the unemployed. "While the recession has certainly made things worse, this funding crisis has been developing for years."

At the start of the crisis, only 19 federal states met the recommended funding level, amounting to 1 year of reserves equal to the highest amount of unemployment insurance paid out during prior recessions.

Economic experts speculate that states build up their jobless benefit warchest only during strong economic times so that they can draw from these fund during lean times like these.

However, in practice, to fill their warchest, local state governments gather money for unemployment benefits by setting a fixed tax on employers on a small portion of their employee wages. While wages and the requirements for unemployment benefit levels have been climbing, governments haven't been increasing the taxable base wages at the same pace.

Wrongly, they stuck to a "pay as you go" method, taxing low during abundant times and ironically raising taxes only when hard times come.

Only 13 states were able to fund jobless benefits without borrowing from the Federal government. Out of that about 10 of them followed the recommended path to finance their warchest.

Here's how much they've borrowed from the federal government.

StateBorrowed

California$8.40 billion

Michigan$3.78 billion

New York$3.00 billion

Pennsylvania$2.81 billion

Ohio $2.23 billion

North Carolina$2.14 billion

Illinois$2.06 billion

Texas $2.03 billion

Indiana $1.81 billion

New Jersey$1.55 billion

Florida $1.50 billion

Wisconsin$1.34 billion

South Carolina$851 million

Kentucky$760 million

Missouri$687 million

Minnesota$638 million

Connecticut$422 million

Georgia $337 million

Nevada $331 million

Arkansas$318 million

Virginia$317 million

Massachusetts$279 million

Alabama $268 million

Rhode Island$204 million

Colorado$186 million

Idaho $181 million

Maryland$104 million

Kansas $65 million

New Hampshire$23 million

South Dakota$23 million

Vermont $23 million

Arizona $22 million

Virgin Islands$13 million

Delaware$1 million

by: Huey Harden

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