Nov 25 2008
1.5 million Californians out of work
California now has more that 1.5 million unemployed nearly a third of whom have lost their jobs in the last year. The State’s unemployment rate jumped to 8.2 percent in October, the highest rate in 14 years. This is the third-highest unemployment rate in the nation after Michigan and Rhode Island, which were both have rates of 9.3 percent. The largest hit came in the construction industry, which has lost 65,900 jobs in the last year, followed by manufacturing. Between October 2007 and October 2008, the state lost 101,300 jobs, including 24,600 in the past month alone. The State Employment Development Department said its monthly survey found 527,918 people were receiving unemployment checks in October.
This bad news came just as a state fund that pays these unemployment benefits was about to run out of money and is on the brink of insolvency. The state’s unemployment insurance fund is expected to have a deficit of $2.4 billion at the end of 2009, forcing it to borrow from the federal government for only the second time since the program was established in the 1930s. If no steps are taken to increase the fund’s revenue or reduce its payouts, its deficit is projected to hit $4.9 billion by the end of 2010.
Governor Schwarzenegger has proposed filling this gap by raising the payments from employers into the fund and by reducing benefit levels for unemployed workers and raising income eligibility requirements. He has not been able to reach agreement with the State Legislature on this approach, as they struggle to address California’s now-$11.2 billion budget deficit.