Strapped States Fall Behind on Unemployment Checks

By Rob Quinn,  Newser Staff
Posted Jul 24, 2009 6:22 AM CDT
Job seekers line up for a career fair in Illinois.   (AP Photo/M. Spencer Green)
camera-icon View 1 more image

(Newser) – Years of tax and budget cuts have left the nation's unemployment system badly weakened just as it's most needed, the New York Times reports. At least a million applications are still stuck in the system and many applicants have to wait months for their first check. Sixteen states have exhausted their reserves and are now using borrowed money to pay unemployment checks. Many more are expected to join them before the year is out.

Problems with the system were ignored when unemployment was low, leaving states unable to cope with the massive rise in joblessness in the recession. Payroll taxes to fund the program dropped by some 40% over the last decade, leaving states with reserves well below the recommended level. "The attitude became, ‘We don’t need a firehouse—we can buy hoses when the fire starts,’" says one analyst.