Unemployment and Unemployment Insurance

The unemployment rate edged down to 7.4 percent from 7.6 percent, its lowest number level since December 2008, while employers added 162,000 jobs, the Labor Department reported on August 2, 2013. Employment rose in retail trade, food services and drinking places, financial activities, and wholesale trade.

Unemployment rates remained elevated in 2012, although rates have dropped since the Great Recession ended. In 2010, the national unemployment rate was 9.6 percent. Throughout 2011, the rate hovered around 9 percent, while the average annual rate was 8.1 percent for 2012. At the end of 2012, Nevada and Rhode Island had the highest unemployment rates, both hitting 10.2 percent. North Dakota reported the lowest rate at 3.2 percent.

Many states have exhausted their unemployment trust funds—the funds from which states pay unemployment benefits—due to high unemployment rates and the extended length of time many people have been without work. More than half of states have borrowed from the federal government to cover costs, which may impact future fiscal stability.

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Since hitting a historical high of 45.5 percent in March 2011, the long-term unemployment rate (the percent of those unemployed for 27 weeks or more) has barely budged, despite improvement in the overall unemployment rate. Last month, 41.1 percent of the jobless were considered long-term unemployed. Meanwhile, the unemployment rate has dropped from a high of 10 percent in October 2010 to 8.2 percent in June 2012. The persistently high rate of long-term unemployment is unprecedented - even when the unemployment rate exceeded 10% for many months in the early 1980’s, only around one in four of the unemployed were out of work for a similar length of time.

According to the Associated Press, the number of claims for unemployment benefits fell slightly last week, indicating modest job growth. When the number of applications falls below 375,000 a week, it implies hiring is strong enough to reduce the unemployment rate. Some recent data on unemployment rate dropping from 9 percent in April 2011 to 8.1% last month may suggest that the economy is...

The U.S. Department of Labor released the latest state unemployment figures earlier this week. According to this report, in January 2012, 45 states recorded a decrease from the previous month, one state (New York) experienced an increase and the remaining four states (Maine, Massachusetts, New Hampshire and New Mexico) did not see a change. A comparison of state unemployment trends in January 2012 with January 2011 reveals that 48 states had rate decreases with only New York experiencing an increase and Illinois remaining unchanged. 

Late last week, the U.S. House of Representatives passed a bipartisan bill ending the stalemate over the payroll tax cut and assorted entitlement programs, and the Senate quickly followed suit. But the details of the bills paint an interesting picture of the political landscape as we approach the 2012 election cycle, and what may be even more important to states, the Lame Duck session of Congress that will follow it.

The bill passed by Congress would keep the payroll tax rate at 4.2 percent through 2012, instead of springing...

As of Dec. 29, 2011, 26 states plus the Virgin Islands were borrowing money from the Federal Unemployment Account to help pay growing claims for unemployment insurance benefits, with outstanding loans then totaling more than $36.4 billion. New York and California are among the top borrowers of federal funds, with a combined total of more than $13.2 billion in loans. Pennsylvania is close behind, having borrowed $3.2 billion. On a per-capita basis, state borrowing ranges from a low of $6.79 in Alabama and $21.99 in Kansas to a high of $303.27 in Indiana and $283.08 in Nevada.

Unemployment rates remain high and many people have been without work for extremely long periods of time, exhausting state unemployment trust funds— the funds from which states pay benefits. More than half of the states are borrowing from the federal government to cover costs, which may have an impact on future fiscal stability.
 

At the end of 2011, it looked like employment was trending in a positive direction: both the number of unemployed persons and the unemployment rate was dropping. Employment was up – expanding by 1.9 million over the course of the year. Even manufacturing showed improvement, growing by 23,000 jobs in the last month of 2011. But, although moderate improvement can be seen at the national level, states are just beginning the monumental task of digging out of the fiscal hole caused by the recession. One of those tasks is to address unemployment insurance trust fund solvency. More than half of states borrowed billions from the federal government to fund unemployment insurance programs, and now employers in those states are facing tax increases as a result. 

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