Unwelcome Belt Tightening – Sequestration Cuts Affect California Unemployment


There's some seriously unwelcome news out of Sacramento. On April 28, more than 400,000 out of work Californians will see a reduction of almost 18% (17.7%) in their weekly unemployment insurance (UI) benefits.

The culprit? That awful, shapeless beast known as the sequestration, according to the state Employment Development Department (EDD).

Federal extensions of UI run through the end of December. These new cuts will not affect the number of weeks that the unemployed will be eligible for benefits (currently at 26 with up to 47 weeks of federal extensions). In other words, the unemployed will continue to receive benefits, but the amount of the check will decrease by an average of about $42 per week.

"We understand that Unemployment Insurance benefits are often their only shield against economic disaster and that cuts in those benefits can be very challenging," said EDD Director Pam Harris in a prepared statement which is also already the understatement of the year. "But we want to get the word out so that those relying on these federal benefits can at least prepare for the reductions."

UI recipients should start receiving official mailed notices from EDD about these looming cuts. There are a selection of groups for whom these cuts will not apply including recently unemployed workers who are receiving regular state-funded unemployment benefits; recipients of training extension benefits under the California Training Benefit program; and recipients of the Trade Readjustment Assistance extended benefits.

That 400,000 represents the number of people in California who have been without work for six months or longer, and that number could shoot up pretty quickly. The EDD news release notes that "hundreds of thousands more" Californians could be impacted by the reduced benefits before the end of the year as they become eligible for federal extension benefits. More than one million Californians have already exhausted all of their available UI benefits as of April 8. In February, California's 9.6% unemployment rate tied with Mississippi and Nevada for highest in the nation.

It gets worse.

EDD anticipates the potential loss of more than $30 million in federal funding for the administration of UI over the next 15 months. On top of what they cite as "significant underfunding" by the federal government, EDD now says that the number of UI representatives available to help clients will be substantially reduced. Meaning, presumably, that worried or angry clients will have no human being to direct their anger toward.

The EDD also expects to lose $3.3 million in federal funding that supports job search assistance for job seekers at "One-Stop Career Centers throughout the state" and a minimum $15 million hit to Workforce Investment Boards which provide job training throughout the state.

Read more on the EDD website