Deep Recession May Bankrupt Funds for Jobless in 28 States

A deep recession that continues putting Americans out of work could bankrupt the unemployment trust funds of at least eight states by midyear and another 20 states by December, according to government figures.

Since June, 1 million Americans have been added to the ranks of the jobless. Many analysts say the recession could put another 1 million Americans out of work this year as unemployment rises to as much as 7%.

If state unemployment funds do go bankrupt, no workers who qualify for benefits would be in danger of going without, because states can borrow from the federal government’s $3-billion reserve fund.

Still, critics of the current system say its inability to help more people, and its threatened solvency, demonstrates that Congress and the states should have been beefing up unemployment trust funds during better economic times.

So far, only Connecticut has filed a request with the federal government saying its unemployment trust fund is nearly broke and it needs to borrow money to pay claims.

But Massachusetts has said it will probably have to borrow by April, and Ohio, Michigan, Arkansas, West Virginia, Missouri and Minnesota have only enough cash left to pay benefits for six months, if unemployment rates remain at present levels.