The Changing Face of the U.S. Unemployment Program
With the newly created Middle Class Tax Relief and Job Creation Act being signed into law in February, both employed and unemployed have received, or will maintain, a modest benefit throughout the rest of 2012; unemployment benefits have been extended along with the current payroll tax cut of 4.2 percent.
But what may go unnoticed are the issues the Act addresses regarding state unemployment programs. In order to remedy many states’ inability to pay back loans received from the federal reserve, the bill includes a reduction of the maximum duration unemployment may be received by an individual; decreased from 99 weeks to 73 in states with above a 9 percent unemployment rate. The payout duration was even further reduced for states with unemployment rates at or below 9 percent, shrinking to 63 weeks.
Work sharing programs, aimed at reducing layoffs, are also expanded by the new law. The Act offers new options for companies facing budget crises such as the ability for an employer to cut by 20 percent the work hours of five employees in lieu of laying off one employee. The employer would then file a claim for unemployment and could use the benefits to supplement the wages of the employees losing hours. Donna Groh, Executive Director of the Unemployment Services Trust, remarked, “Overall, the next decade will need to see vital changes to the unemployment system and public policy at a federal and state level, if our unemployment funds are to recover enough to withstand the next recession.”