The Ten States Where The Most Unemployed Could Lose Benefits

Nearly 2 million Americans currently receiving unemployment benefits stand to lose coverage this January if Congress does not extend the emergency federal unemployment insurance program. 24/7 Wall St. has reviewed a study by the National Employment Law Project to identify the ten states where the most people could lose benefits.

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The supercommittee was responsible for extending the unemployment benefits. The group was supposed to reach a federal debt-reduction agreement that would have included an extension of the federal unemployment insurance for people who have run out of state-level benefits. Since the supercommittee failed to reach an agreement, the federal programs will expire on December 31 unless Congressional lawmakers renew it.

A similar uncertainty existed last year, before federal benefits were eventually extended. However, a sharply divided Congress may find it even more difficult to extend benefits this year. Rebecca Dixon, policy analyst at NELP, told 24/7 Wall St. that “If Congress fails to renew unemployment insurance benefits, 6 million hardworking Americans struggling to get back on their feet will lose their emergency lifeline. These modest payments are vital to keeping these workers and their families afloat while they search for work in the worst job market since the Great Depression.”

Despite recent declines in the national rate, unemployment is still a huge problem in the U.S. The rate has remained around 9% for three years, well above 2008’s 5% rate. Worst still, 42% of the unemployed are currently “long-term unemployed,” meaning they have exhausted all state unemployment benefits, received before federal benefits and usually lasting for 26 weeks. This accounts for approximately 6 million people. If the federal program expires, 1.8 million people who either currently collect federal benefits or are to begin collecting them in January will be completely cut off.

The states on this list have the largest number of residents who could lose benefits. Many states make the list simply because of their size. New York and Texas, for instance, both have unemployment rates that are below the national average but are among the most populous states in the country. Other states on the list have particularly high unemployment, in addition to large populations. California, for instance, has the second highest rate in the country, and Michigan has the fourth.

These are the ten states where the most unemployed could lose benefits in 2012.

10. Michigan
Unemployment rate: 10.6% (4th highest)
No. residents potentially losing insurance in January: 66,700
Total population: 9,883,640

Although Michigan’s unemployment rate is down from 12.8% last year, it still has the fourth highest rate in the country. Worst still, the state’s unemployment rate has exceeded 10% for longer than any other state in the country. To deal with the extreme unemployment problem, Michigan borrowed approximately $4 billion from the federal government to keep its unemployment trust fund afloat last year. In order to help pay this money back, Governor Rick Snyder signed a bill that will cut state unemployment benefits from 26 weeks to 20, starting in January 2012.

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9. Georgia
Unemployment rate: 10.2% (9th highest)
No. residents potentially losing insurance in January: 68,900
Total population: 9,687,653

Georgia borrowed $721 million from Washington to fund its unemployment benefits during the worst parts of the recession. The state must now pay this debt, which may result in cuts to jobless benefits. Labor Commissioner Mark Butler stated, “I believe we have to keep these taxes at a minimum right now because they’d be an additional burden on businesses that would keep them from hiring people,” in an interview with the Atlanta Journal-Constitution. The state’s unemployment rate has been higher than the national average for 50 consecutive months.

8. North Carolina
Unemployment rate: 10.4% (7th highest)
No. residents potentially losing insurance in January: 69,700
Total population: 9,535,483

In June of this year, North Carolina Governor Bev Perdue issued an executive order extending federal unemployment benefits for 47,000 state residents. These benefits may soon expire, leaving the state’s unemployed out of luck. North Carolina currently owes the federal government approximately $2.5 billion that it borrowed to previously fund unemployment benefits —  a debt that now must be paid.

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7. Pennsylvania
Unemployment rate: 8.1% (24th lowest)
No. residents potentially losing insurance in January: 74,600
Total population: 12,702,379

Pennsylvania has the highest minimum employer unemployment tax rate and the fourth highest maximum employer tax rate, according to the Tax Foundation. Despite this, the state’s Unemployment Compensation Trust Fund is $3.8 billion in debt. In order to pay this debt, the state government will likely cut benefits. In 2010, Pennsylvania Governor Tom Corbett incited controversy when he said, “The jobs are there, but if we keep extending unemployment, people are just going to sit there.”

6. Illinois
Unemployment rate: 10.1% (10th highest)
No. residents potentially losing insurance in January: 84,600
Total population: 12,830,632

According to the Economic Policy Institute, Illinois’ unemployment rate will increase to 10.5% in 2012 if Congress does not extend the Emergency Unemployment Compensation program. The state’s unemployment rate is already higher than it was last year, when it was 9.8%. The Illinois state unemployment fund entered the recession with a surplus of more than $2 billion. It now is in debt of over $4 billion, $2.4 billion of which is owed to the federal government.

5. New Jersey
Unemployment rate: 9.1% (15th highest)
No. residents potentially losing insurance in January: 85,900
Total population: 8,791,894

Last year, when it was still unclear whether congress would renew the Emergency Program or not, New Jersey’s Extended Benefits program ensured that no residents would lose unemployment benefits. Due to an amendment to that program that will expire on December 31st, the state now has one of the largest populations of people who may be affected by loss of benefits. The state is currently considering the “Back to Work NJ Program,” a training program meant to help the unemployed gain new work skills.

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4. Texas
Unemployment rate: 8.4% (23rd highest)
No. residents potentially losing insurance in January: 102,500
Total population: 25,145,561

Texas’s unemployment rate of 8.4% is significantly lower than the national rate of 8.6%. However, due to the size of the state’s population, it has one of the largest amounts of people facing loss of unemployment benefits. According to the Dallas Business Journal, the Texas Workforce Commission has extended state unemployment benefits by six weeks because of its unemployment rate.

3. New York
Unemployment rate: 7.9% (22nd lowest)
No. residents potentially losing insurance in January: 126,000
Total population: 19,378,102

In March of 2011, New York Governor Andrew Cuomo signed legislation that extended federally-funded unemployment insurance benefits through 2011. At the time, Cuomo defended the measure, stating that “Re-entering the workforce can be daunting and time consuming. This law provides basic relief for the thousands of job-hunters across the state.” If benefits expire, 126,000 New Yorkers will lose their safety net this January.

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2. Florida
Unemployment rate: 10.3% (8th highest)
No. residents potentially losing insurance in January: 131,000
Total population: 18,801,310

Florida has the fifth lowest unemployment benefits in the country, according to the Tax Foundation. Additionally, the state is one of three to have made significant cuts in benefits and eligibility over the past two years, changing its policy of a 26 week maximum benefit period to 23 weeks at most, and that is only when the unemployment rate is 10.5% or greater. If it falls below 5%, residents can only collect 12 weeks. Currently, there are more than 400,000 Floridians collecting benefits.

1. California
Unemployment rate: 11.7% (2nd highest)
No. residents potentially losing insurance in January: 305,400
Total population: 37,253,956

California is the largest state in the country, by population, and it has the second highest unemployment rate to boot. The state has borrowed $11 billion from the federal government over the last few years for its unemployment fund, and now must pay back that amount plus hundreds of millions of dollars in interest, according to the Los Angeles Times. Unemployed residents who will lose all benefits if federal handouts are not extended will exceed 300,000 — accounting for nearly 17% of all those in the country who will be cut off.

Charles B. Stockdale