OK. I guess technically the title is not true. If folks hadn’t been laid off and collected Unemployment Compensation, the funds would just be sitting in the various state coffers, unused. But the unemployed are not the reason the economy tanked; the unemployed are not the ones sending jobs overseas; the unemployed are not the ultimate root cause of the problem.
Michigan started things back in March but has since been followed by Missouri and now Florida. (Other states may have done so as well, these three are the ones I know for sure have done this.) Florida’s new law actually goes beyond Michigan and Missouri, as bad as their laws are. Where MI and MO cut the maximum period for collecting state level unemployment compensation from 26 weeks to 20 weeks, Florida ties the benefits to the overall state unemployment rate. Via the Tampa Tribune article linked above:
TALLAHASSEE — Out-of-work Floridians would receive fewer state benefits while businesses pay less tax under a controversial proposal approved Friday by a divided Legislature.
The deal, which Gov. Rick Scott is expected to sign into law, immediately cuts unemployment benefits by 11.5 percent.
Jobless Floridians would continue to receive a maximum payment of $275 per week, among the lowest of any state in the country. But they would be paid for no more than 23 weeks, instead of 26.
The bill also creates a sliding scale that cuts and adds weeks of benefits based on the unemployment rate. Unemployment compensation would drop to as low as 12 weeks if the average unemployment rate drops to 5 percent or lower. A week would be added for every 0.5 percent the jobless rate climbs.
I can guarantee you that the newly unemployed person is not going to give two shits to know that the overall state unemployment rate is X percent so the number of weeks of benefits are limited accordingly. All that newly unemployed person is going to see is s/he is out of work and the state supplied safety net is full of gaping holes. Annie Lowrey at Slate on Friday offered this analysis:
In March, Michigan became the first state to take an axe to its standard unemployment benefits, even though the state boasts one of the worst labor markets in the nation. The Republican government cut the number of state-sponsored, initial weeks from 26 to 20, effective in January. It said the state simply could not afford them: It owes the federal government $3.9 billion, borrowed to pay past unemployment benefits, and just cannot go further into the red. (Michigan and 48 other states have mandatory balanced-budget rules.)
For all the other states cutting back, the issue is inaction, rather than fiscal pressure. Some states needed to make a certain simple legislative fix to ensure that the federal government kept on kicking in its share of weeks of benefits—weeks of benefits already budgeted and paid for in Washington. A number of states failed to do so. So, on April 16, North Carolina, Tennessee, and Wisconsin all lost 20 weeks of federal benefits, effective immediately. Missouri did on April 2 as well.
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