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States brace for loss of extended jobless program

A handful of states would be hit harder than others by the looming expiration of long-term unemployment insurance benefits, according to an analysis by economists at IHS Global Insight.  

The decision to renew the emergency program, which provides federal funding to extend weekly unemployment benefits for up to 99 weeks in some states, is in limbo as Congress deadlocks once again over a year-end package of budget bills. A Senate-approved bill that would have renewed the program for two months collapsed Monday after House Speaker John Boehner, facing a revolt from conservative members, walked away. 

Failure to renew the program would hurt millions of families struggling to get by, cut consumer spending and take a bite out of economic growth nationwide. But the pain would be felt most sharply in a handful of states where benefits payments have had the biggest impact on local spending, including Nevada, New Jersey, Oregon, North Carolina, Rhode Island, Pennsylvania, Michigan, Washington, California and Connecticut.

“Every state has seen some benefit from the (emergency unemployment insurance) program, but for the ones that need it most the impact on income is even more significant,” according to the report by IHS Global Insight economists Karl Kuykendall and Michelle Valverde.

Part of the disparity in that impact is the result of a wide range of weekly payment caps set by the states, which manage the unemployment insurance benefits. New Jersey, for example, caps benefits at $598 a week, while the maximum weekly benefit in Mississippi is $235.

Federal funding for the emergency extended benefits program has also been directed first to states with the highest unemployment rates. (As a state’s jobless rate falls below a set threshold of 8.5 percent, a portion of the extended benefit program automatically expires.) That means states with the highest jobless rates will be among the biggest losers, according to the IHS Global Insight report.  Nevada's rate of 13.4 percent leads the nation, followed by California's 11.7 percent, based on the latest available figures. (See state-by-state tab of map below.)

Democrats who support renewing long-term jobless benefits argue that, in addition to providing support for households struggling to make ends meet, the program has helped support consumer spending and prop up the U.S. economy. Republicans have proposed scaling back the program to reduce the impact on the budget deficits. Some GOP opponents have also argued that extending benefits for up to 99 weeks reduces the incentive for unemployed workers to look for a job.

The cost of the program has been falling as millions of workers have fallen off the rolls. Many of those workers stopped collecting because they found a job. Others, still jobless, have exhausted all 99 weeks of extended benefits and are now without a paycheck. Since the recession ended, the number of people collecting emergency benefits has fallen steadily, from a peak of 12 million to a just under seven million. But during that period, the unemployment rate fell by just 0.6 percent.

“Although the job market improved slightly, it seems the proportion of people finding jobs compared with the number of claimants exhausting benefits is relatively low,” the economists said.

Related: States where the most unemployed could lose benefits