As part of the $85 billion sequester, federally funded Emergency Unemployment Compensation for the long-term unemployed was reduced 10.7 percent on March 31. The EUC was enacted in 2008 because of the Great Recession and has been renewed several times since, though not without major battles and horse-trading in Congress. The sequester will slice $2.4 billion out of the economy for fiscal 2013 by reducing these benefits. As of the week ending April 13, states reported that 1,777,737 Americans were receiving EUC benefits. (It should not go without noting that the majority of the 4.4 million workers counted as long-term unemployed don't receive any benefits because they have exhausted them or were never eligible for them from the get-go.)
The cutback from the sequester isn't even across the nation because state authorities get to decide when reductions in the federal benefit will go into effect in their particular jurisdictions. The later in the year they wait to act, the less each EUC check will be. And, despite Republican gripes, it's already not fat city for compensation recipients.
In California, for example, where unemployment at last count was 9.4 percent, nearly two points above the national average, some 400,000 EUC recipients—whose average benefit was $296 a week—took a $52-a-week hit when state authorities imposed the cut April 28, a 17.5 percent reduction. For people already hanging on economically by their fingertips, that's like breaking off a couple of nails. And no longer enough to keep a family of two above the federal poverty line.
“The impact is going to be felt more severely in states that pay adequate benefits,” said Maurice Emsellem, policy co-director at the New York-based National Employment Law Project, which advocates for issues including economic security for low- wage workers and the unemployed. The cuts will mean “there is less money circulating in the economy. Folks spend every dime of their benefit.” [...]At one time, jobless Americans in the worst-hit states could collect up to 73 weeks of federally funded benefits on top of the 26 weeks provided by the states, making them the so-called "99ers." But, as a consequence of a bargain made between congressional Republicans and the White House in February 2012, the extended benefits now only cover 14 to 47 extra weeks, depending on the unemployment rate in a particular state.
Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania, said because households quickly spend their benefits checks, the multiplier effect that money has on GDP one year after a policy change is around 1.5. Because of that, cuts to unemployment insurance have a larger impact on the economy than the official dollar loss suggests.
In addition, several states have cut back on the 26-week duration of benefits they have provided for the past half-century. For instance, Michigan, Missouri and South Carolina cut the number of weeks from 26 to 20. Florida, Georgia and North Carolina use sliding scales ranging from 12 to 23 weeks depending on the state's unemployment rate. Some also cut their maximum benefit. In North Carolina now, it's $350 a week; in Florida just $275. Those state rates are, of course, what is used to determine how much recipients will get in their reduced federal compensation checks.