During the Great Recession, states faced enormous challenges related to funding a number of vital programs. One of those programs was adequately financing their unemployment insurance trust funds, a program that originated in the 1930s. As a result of the doggedly high unemployment rates in so many states during the Great Recession and previous actions taken by states (such as expanding unemployment benefits and cutting unemployment insurance taxes), the unemployment insurance funds in a majority of the states were thrust into perilous shape. By 2013, the funding position of these funds improved as a result of an advancing economy and a series of actions initiated by states.

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In Minnesota, state legislators have created a new program to better help displaced workers turn a lost job into an entrepreneurial opportunity. Meanwhile, that state and a growing number of others in the Midwest are trying to keep more people from losing their jobs in the first place — by reworking unemployment-insurance programs in ways that encourage employers not to lay off workers when business is slow, but to instead reduce their hours.

In December 2013, the national unemployment rate fell to 6.7 percent, the lowest level in five years. After hitting a post-recessionary high of 10 percent in October 2009, the unemployment rate has fallen slowly and steadily, but remains nearly 2 percentage points higher than it was when the recession began in December 2007. In December 2013, North Dakota (2.6 percent), South Dakota (3.6 percent) and Nebraska (3.6 percent) had the lowest unemployment rates, while Rhode Island (9.1 percent), Nevada (8.8 percent), and Illinois (8.6 percent) had the highest rates.

During and after the recession, many states 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. At its peak in 2010, 31 states plus the Virgin Islands were borrowing nearly $41 billion. That number is down dramatically: as of January 30, 2014, 15 states had balances on their loans totaling $21.7 billion.

In his 2014 State of the Union speech, Pres. Obama called out unemployment as a continuing problem and called on the private sector to help in giving those considered “long-term unemployed” a chance. “I've been asking CEOs to give more long-term unemployed workers a fair shot at new jobs, a new chance to support their families,” said Obama. A few days later, the White House announced that about 300 businesses, including 20 members of the Fortune 50 and big names like Walmart, Apple, General Motors and Ford, had signed on to revise their hiring practices to avoid discriminating against applicants who had been out of work for a significant amount of time.

In November 2013, the national unemployment rate fell to 7 percent, the lowest level in five years. After hitting a post-recessionary high of 10 percent in October 2009, the unemployment rate has fallen slowly and steadily, but remains 2 percentage points higher than it was when the recession began in December 2007.1 

Jennifer Burnett, CSG Program Manager, Fiscal and Economic Development Policy, outlines the top five issues for 2014 related to fiscal and economic development policy, including pervasive federal instability, a sluggish recovery, soaring health care costs, a stagnant labor market and new demands on state resources for economic development.

In November 2013, over 4 million of the unemployed were considered “long-term unemployed”—someone who has been unemployed for more than 27 weeks.

Among the depressing facts of this current unemployment cycle, the most depressing may be about the 4.2 million long term unemployed workers.  According to a recent Time article, despite the lowering of the unemployment rate, the long term unemployment rate remains stubbornly high at around 40 percent. For a historical comparison, during the recession of the 1980s, about 25 percent of the laid off workers became long term unemployed. Long term unemployment is defined as being out of work for 6 or more months.

According to the most recent data from the Bureau of Labor Statistics, state unemployment rates did not change significantly in July 2013 compared to a month earlier. Twenty-eight states and the District of Columbia had unemployment rate increases, with an average increase of 0.15 percentage points. Fourteen states saw no change in their rates, while 8 states reported decreases. Mississippi reported the biggest month-over-month improvement in July, dropping 0.5 percentage points from a 9.0 percent unemployment rate in June to 8.5 percent in July.

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