Federally funded benefits paid to the long-term unemployed were lowered by 10.7 percent starting March 31 as part of reductions to planned government spending called sequestration. Benefit cuts will affect about 1.8 million workers, based on Labor Department data, and add to the drag on consumer spending from a payroll tax increase that took effect in January.
The reductions will shave about $2.4 billion from the unemployment trust fund this fiscal year, according to an Office of Management and Budget report. While that’s not enough to have a measurable impact on $11 trillion in annual consumer spending nationwide, the effect will be magnified in places with large numbers of long-term unemployed and in states with generous programs, such as Hawaii.
“The impact is going to be felt more severely in states that pay adequate benefits,” said Maurice Emsellem, policy co- director at the New York-based National Employment Law Project, which advocates for issues including economic security for low- wage workers and the unemployed. The cuts will mean “there is less money circulating in the economy. Folks spend every dime of their benefit.”
Chosen excerpts by Job Market Monitor
via Unemployment Benefit Cut Adds to Drag on U.S. Spending: Economy – Bloomberg.
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