California Unemployment Rate Steady but Payouts Cut in Half

Monday, August 13, 2012

Although California has the third-highest unemployment rate in the country, 93,000 long-term jobless residents had their benefits cut off prematurely in May when the state fell short of eligibility requirements for federal extensions.

That contributed mightily to a 50% drop in unemployment payments from two years ago, bringing those expenditures down from $2 billion in June 2010 to $1 billion in June 2012. A slight decline in the number of jobless―from 2.26 million in 2010 to 1.97 million now―accounts for some of the reduced payments.

The state’s jobless rate in June was 10.7%, down from 10.8% in May and 11.9% in June 2011.

California only pays for the first 26 weeks of unemployment benefits. After that, a wave of federal extensions with varying time lengths kicks in, potentially taking the payouts to 99 weeks. But, although state unemployment is high, the three-month average is not 10% higher than it was during the same period during one of the last three years. That failing disqualifies it from participation in the final 20-week FED-ED extension.

Thousands more jobless are expected to exhaust their benefits earlier than expected each month under the federal formula. California’s maximum benefit is already scheduled to be reduced to 67 weeks if a claim is filed after September 1 because of federal legislation scaling back benefits. Around 1.1 million Californians are currently certified to receive benefits.  

As of August 6, 821,500 unemployed workers had exhausted their benefits, according to the state Employment Development Department.

More than 932,000 Californians have taken advantage of the FED-ED program since it became available here in March 2009. The payments act as anti-recessionary stimulus and have pumped close to $5.2 billion in federal funds into the state economy.

The state has been borrowing from the federal government to make its share of unemployment payments since its trust fund ran out of money in 2009. California owes Uncle Sam more than $10 billion and has begun paying back interest on the loans. It has a $313 million payment due in September.   

–Ken Broder


To Learn More:

California Unemployment Payouts Drop by Half (by Mary Ann Milbourn, Orange County Register)

California Sees Large Jobless Claims Drop (by Melissa Wiese, Sacramento Business Journal)

California’s Unemployment Rate Decreases to 10.7 Percent (Employment Development Department) (pdf)

New Developments on Federal Unemployment Extensions (Employment Development Department)

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