Jobless Funds Getting Low in California, Other 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--including California--by December, according to government figures.

The strain on the nation’s unemployment system--already eroded and providing benefits to less than half America’s 7 million jobless--will worsen as the economic slump persists and more layoffs occur, predicted Rep. Tom Downey, (D-N.Y.), acting chairman of the House Ways and Means subcommittee on human resources.

Since June, an additional 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, with unemployment rising to as much as 7%.

If state unemployment funds go bankrupt, no workers who qualify for benefits will be in danger of going without, because states can borrow from the federal government’s $3-billion reserve fund. Still, critics say, the system’s inability to help more people, plus the threat against its solvency, demonstrate that Congress and the states should have been beefing up unemployment trust funds during better economic times.

The Labor Department recommends that states have an 18-month cushion.

Critics complain that fewer Americans are receiving help--in 1975 about three-quarters of out-of-work Americans obtained benefits--because states have tightened eligibility requirements to avoid raising taxes on businesses.

December’s unemployment numbers come out Friday. Many analysts think that 150,000 jobs were lost last month and the nation’s unemployment rate probably jumped again from November’s 5.9% level.

The Labor Department said that, as of December, roughly 3 million of the nation’s 7 million jobless, or 43%, were receiving unemployment benefits. The number has shrunk because states have changed the rules. They require, for example, that workers have more tenure with a company and earn larger paychecks before qualifying for government help.

Those that do qualify receive varying amounts, depending on the state they live in. The national average, as of June, 1990, was $162 a week for an average of 13.5 weeks. So far, only Connecticut has notified the federal government that its unemployment trust fund is nearly broke.