Feds to Cut Emergency Unemployment
By Barbara Perone
In a cruel blow to future job hunters, who may already be cash-strapped due to the flailing economy, the federal government will reduce emergency unemployment benefits by June 30th, cutting weekly benefit amounts by 22.2 percent.
So, how will this affect the amount of benefits I receive?
It’s a little complicated to explain, but, first, understand that not everyone gets the same amount of money in weekly state/federal unemployment benefits. New Jersey unemployment benefits are calculated by excluding 60 percent of an individual’s average weekly pay in a base year. No matter how much money you actually earn, $584 is the highest weekly salary level that the state uses to calculate benefits.
So, let’s say you’re at the maximum — $584 a-week. The state calculates your unemployment benefits by reducing 60 percent of your weekly salary; so, 60 percent of $584 is $350.40. Now, figure out what 22.2 percent of $350.40 is, which comes to $77.78.
Subtract $77.78 from $350.40. You get a total of $255.89 in gross federal unemployment benefits that you would be eligible to receive once the Emergency Unemployment Compensation (EUC) benefits reduction begins at the end of this month.
In other words, minus federal income taxes, you will lose $77.78 in gross federal unemployment benefits each week, if you are at the state/federal government’s maximum allowable weekly salary. You will receive far less if you earn a smaller weekly wage. Again, don’t forget to deduct federal income taxes from your dwindling benefits — geez — you may have enough money left over to feed a parking meter!
Do the cuts affect the state unemployment program?
The cuts only affect those who collect federally-funded (not state-funded, regular) unemployment compensation benefits, which lasts for just 26 weeks. And, benefit amounts will not change for those already receiving federally-funded EUC; the cuts only affect EUC claimants who begin receiving unemployment benefits by the end of June.
How does the EUC program work?
Okay, this can get a little complicated, too. As of January 2013, the federal government allows job seekers to collect a maximum of 73 weeks of EUC benefits. And, unlike the state-funded program, benefits under the federal program are divided into four tiers. The tier category a claimant falls under depends upon the date the person was laid off. Not sure how that’s relevant, but, here’s the maximum number of weeks you can collect benefits under each tier.
- Tier 1: 14 weeks
- Tier 2: 14 weeks, if the state unemployment rate is 6 percent, or higher
- Tier 3: 9 weeks, if the state unemployment rate is 7 percent or higher.*
- Tier 4: 10 weeks, if the state unemployment rate is 9 percent or higher
Just so you know, in April, the New Jersey unemployment rate was at 8.7 percent*.
How will claimants be notified about the upcoming reduction?
Applicants will receive a letter informing them of their new weekly benefit amount when the reductions begin. Claimants may review their new benefit amounts online by using Claim Inquiry at www.njuifile.net.
Why are the feds making these cuts?
They’re part of a federal spending reduction program dubbed sequestration, a series of automatic, across-the-board cuts to government agencies, totaling $1.2 trillion in reduced spending over 10 years.
These cuts will be split 50-50 between defense & domestic discretionary programs. It’s all part of last year’s fiscal cliff business, you know, that thing between Congress and the White House; it’s an effort to stunt the growth of the, rising-like-it’s-stuffed-with-cakes-of-yeast, national debt – which is now at $16 trillion.
How long will the cuts last?
There seems to be no definitive answer to that question. The reductions will remain in effect for benefits paid through September 28, 2013, the end of the federal, fiscal year. Right now, it is unclear whether the federal government will continue cutting unemployment benefits after September or allow the already reduced benefit amounts to remain. Anybody have a crystal ball?