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Unemployed workers see cuts in aid because of sequestration

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By Thomas Olson
Tuesday, July 2, 2013, 10:42 a.m.
 

With his federal unemployment compensation cut in April, Brandon Kennedy could no longer afford his own apartment in Whitehall two months later.

“So, now I'm living at home in Brookline with my mother at 32 years old,” said Kennedy, who was laid off from his technology sales position in June 2012.

Kennedy is one of about 102,300 Pennsylvania residents who, according to a study released Tuesday, had their long-term jobless benefits reduced because of federal sequestration budget cuts.

The automatic spending cuts by Congress and the Department of Labor chopped $2.4 billion in federal emergency unemployment compensation payments to states, according to the report from the National Employment Law Project. The cuts occur as many unemployed Americans still face a challenge finding jobs despite the improving economy.

“Long-term unemployment has been at record levels since the Great Recession,” said George Wentworth, senior staff attorney for NELP, a group that advocates on issues affecting low-wage and unemployed workers.

About 4.4 million Americans, or 37 percent of all unemployed, have been out of work for at least six months and qualify for federal EUC benefits, he said. The program, which is administered by the states, provides aid to unemployed workers who have exhausted their state benefits.

“The program has been critical in the economy to help people pay for food, rent and mortgages,” said Wentworth. “It has helped hundreds of thousands of people stay out of poverty and get back on the economic ladder.”

Unemployment in Pennsylvania was 7.5 percent in May, according to the latest data, a decline from 7.6 percent in April. The national jobless rate was 7.6 percent in May, up from 7.5 percent in April.

Each state determined how and when to make its EUC reductions.

The Pennsylvania Department of Labor and Industry reduced the federal unemployment compensation benefit by an average $36 a week, or about 11 percent, on April 6. (The average cut nationally was $43 a week.) That brought the average payment in Pennsylvania down to about $337 a week.

“I've essentially lost my independence,” said Kennedy, whose unemployment compensation benefit dropped to $290 a week from $373. The difference was partly because of federal sequestration and partly because a part-time job he once worked lowered his benefit payments.

Unemployed Pennsylvania residents can receive up to 37 weeks of federal EUC payments after they have exhausted 26 weeks of state-funded jobless benefits.

“Unemployment (compensation) doesn't fully replace people's income. It's about 60 percent in Pennsylvania,” said Mark Price, labor economist for Keystone Research Center, Harrisburg.

The job prospects for the unemployed in the Pittsburgh region are “a bit better than the state overall,” Price said.

The improving jobs picture in the region, underscored by the latest numbers, bodes well for those who have faced cuts in their benefits. It means they may have a better chance of finding a job and won't need to rely on unemployment benefits.

The seven-county region's unemployment rate improved to 6.9 percent in May — well below the state's 7.5 percent — from 7.1 percent in April, the labor and industry department said Tuesday.

The Pittsburgh region generated 1,000 new jobs in May. The region added 12,900 jobs during the prior 12 months, said a survey of employers.

Gains in construction and in leisure and hospitality jobs offset losses in education and health services.

It was the first time the jobless rate has fallen below 7 percent since February 2012, when the rate was 6.9 percent.

Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or at tolson@tribweb.com.

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