Back to Black: States Cut Unemployment Benefits

Source: Jennifer Burnett, Council of State Governments, E-Newsletter, Vol. 70 no. 2, 2011

States owe a whopping $40 billion in loans to the feds so they can continue to pay unemployment benefits to unemployed residents. Now, states are faced with bringing their unemployment programs back in the black, and several states are considering or are implementing cuts to unemployment benefits alongside tax increases….To regain solvency in their unemployment accounts, states have three basic options in the short term: Raise revenues coming into the fund, cut the benefits going out or change the way the fund is financed. Until recently, most states have opted toward the first option–raising revenues by increasing tax rates and taxable wage bases.

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