Sequestration Sends States Scrambling To Implement Unemployment Cut

David Robbins of Carlsbad, Calif., has seen the news that federal budget cuts known as sequestration have taken effect and will chop a variety of programs, and he knows they might affect him, but he doesn't know exactly when or how.

"It's like your car went over the cliff and you're watching the ground come toward you, but you haven't hit yet," he said.

Robbins has been receiving unemployment insurance since he lost his job as a medical diagnostics executive at the end of last year. The sequestration is supposed to trim long-term unemployment insurance by roughly 10 percent, but states, which distribute jobless benefits, may be unable to implement the cut right away.

"We may not have it done by March 31, but I think it will be our goal to implement it within a number of a few months potentially," Pam Harris, director of the California Employment Development Department, told state lawmakers Wednesday during a California State Assembly committee hearing.

California is not the only state struggling to carry out quick changes to its unemployment program. The National Association of State Workforce Agencies has begged congressional leaders for more flexibility, citing the difficulty of reconfiguring old computer systems.

"While this change will provide an additional hardship for the long term unemployed, the very short lead time will make this reduction very difficult for most States to implement," association president Laurie Warner wrote in a letter Friday. "These computer systems are not easily modified to reduce a claimant's weekly benefit amount as currently anticipated."

Confused and frustrated claimants could overwhelm state workforce call centers with inquiries about their benefits, Warner added.

The sequestration cut affects federal benefits known as Emergency Unemployment Compensation, which take effect when workers use up the six months of benefits typically provided by states. (The state benefits are not affected by the federal budget cuts.) Roughly 2 million workers currently receive the federal benefits.

The U.S. Department of Labor is still crafting formal guidance for states on how to put the reduction into effect. So far, different states are approaching the situation in their own ways.

Last week, the Indiana Department of Workforce Development decided it would rather halt extended compensation altogether than try to implement the cut without guidance from the federal government. Shortly after Indiana announced benefits would stop, the feds assured the state that it had a few more weeks to figure out how to reduce the benefits, and the state reversed its decision.

In an effort to give jobless workers as much clarity as possible, the Oregon Employment Department created a calculator on its website so long-term unemployment claimants can figure out how much money they'll be left with each week starting March 31. The app shows, for instance, that an Oregonian receiving the average benefit of $288 will soon get just $257 per week.

"The idea was to keep people from having to call one of our call centers," department spokesman Tom Fuller said.

Robbins, 56, said he filed his initial claim in December, so if he doesn't find a job, he probably won't see his benefits reduced until switching to federal compensation in May -- assuming the California Employment Development Department has implemented the cut by then.

Robbins said the $450 he receives each week represents a fraction of his former salary, and is not nearly enough to pay his rent. If he doesn't find a job, the reduced income will hasten the day his family starts majorly downsizing. "I can keep looking up to the point where I have to get a truck and haul our stuff out to a cheaper place," he said.

He's had promising interviews, but no bites. Given the extreme pickiness of many employers lately, he's worried about how soon he'll be able to replace the salary he lost.

"Basically they're fishing," he said. "They're not actually looking to hire."

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