HOW WE SEE IT: Unemployment Empties Important Pocket

The state is running out of money to pay unemployment benefits. This should surprise no one. People lose their jobs, can’t find replacement jobs and claim benefits. The number of people drawing out goes up. The number of people paying in goes down.

The federal stimulus plan provided a one-time sum that delayed the onset of this problem. However, it came with strings attached. It mandated increases in benefits. All would be better when the recession was over.

Then the recession didn’t end. Recovery, where it’s happening at all, is happening slowly.

As of the middle of this month, the estimated deficit in the state’s unemployment trust fund will reach $223.5 million by the end of this year. For now, deferred interest loans from the federal government is covering the shortfall. However, the fund’s chief source of revenue, payments by employers on behalf of their workers isn’t keeping pace.

There are 26 states are already making ends meet only by using the limited federal money available. Up to 40 states are expected to be in this boat by 2012. So yet another bailout seems probable.

The average weekly benefit for an unemployed worker is $282.04 as of Dec. 18, state figures show. The state was making 84,000 payments a week at that time.

The shortfall comes after the last regular session of the Legislature approved an increase in the unemployment tax by $50 million a year. That kicks in Friday.

In short, as the state and the nation begins to turn their economies around, employers face tax increases to pay for those still unemployed. It could be a “jobless recovery” indeed.

The Arkansas State Chamber of Commerce has made its position known. Their spokesman told lawmakers that businesses understand that they may have to pay more taxes but want either a freeze, cap or reduction in benefits as well.

Alan Hughes, director of the AFL-CIO in Arkansas, said that labor unions have made numerous concessions over the years. He blames businesses for not accumulating more of a trust fund in better economic times. While we don’t often agree with Mr. Hughes, there is nothing wrong with his hindsight. The pervasive belief that the good times were going to last forever has proven to be folly. Payments to the trust fund did not increase while profits did.

Unfortunately, all we can do is agree that Mr. Hughes is right on the merits of the argument. That acknowledgment doesn’t put any money into the trust fund.

The amount of benefits is headed for adjustment. The most likely first adjustment seems, to us, to be on how long these benefits will be paid.

In short, more bad news for those who’ve lost their jobs already.

The one thing we can offer to Mr. Hughes, and to those who could either lose benefits or see them reduced, is a pledge to keep a closer eye on this trust fund when times are good again.

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