Suspended state

Californians lose extended unemployment benefits as recession lingers

Downtown San Francisco is booming, but that hasn't helped the long-term jobless.

In May, a rip appeared in the social safety net that catches many of the people whose careers have been derailed by the continuing economic crisis when Californians lost eligibility for federal relief money under the Fed-Ed portion of the federal unemployment insurance extension program.

The news of the funding loss came to program recipients in a letter from the California Employment Development Department (EDD). According to data obtained from the EDD by the Bay Guardian, 1,994 San Franciscans were among the more than 92,000 people statewide who were cut from the unemployment roles earlier then expected, as the maximum length of benefits was reduced suddenly from 99 weeks to 79 weeks.

A nuance in the legislation that regulates state-by-state eligibly for Fed-Ed caused California's early exit from the program, while individuals in other states with lower unemployment rates and stronger employment prospects remain eligible for longer coverage. New York state, with an unemployment rate of 8.5 percent, 2.4 points lower then California's rate, continues to receive Fed-Ed funding.

Ironically, that's because the recession has lingered longer here than elsewhere, and unemployed Californians are now being punished for being stuck for so long in such a slow economy.

"In order for a state to qualify for the Fed-Ed extension program you have to have a high unemployment rate and certainty California does have a high unemployment rate," EDD Deputy Director Loree Levy told us. "It is just not 10 percent higher than what it has been over the last three years, and that is a requirement of the program. So the good news is that California's economy is improving. It is unfortunate news for a lot of the long-term unemployed individuals who will now be doing without these extension benefits."

In San Francisco, the economy is definitely improving. The Bureau of Labor Statistics (BLS) reports that the San Francisco metropolitan area, which includes San Francisco and San Mateo counties, saw the second highest 12-month rise in employment nationally, creating more than 25,000 jobs, a 2.7 percent leap in employment. This big jump, the second highest nationally, reduced the city's unemployment rate to 7 percent in April, leaving San Francisco a rare rose in a sea of briars.

But that's little consolation to people in industries that have yet to recover, from construction to education to other government jobs.

While the city's economy has been buoyed by tourism, technology, and a segment of pre-existing affluence that has weathered the economic crisis, the statewide the picture is much different. The state's "improving economy" left more than two million Californians unemployed in May, 10.9 percent the state's workforce.

When statewide unemployment ticked up slightly in April, the state's three-month average registered as 8 percent higher than the three-year average, missing by a statistical sliver the federal program's threshold 10 percent increase. This triggered the BLC, which tracks unemployment across the nation, to notify the California EDD that funding of the Fed-Ed program would cease.

The trouble with this metric as a benchmark for benefits dispersion is when discouraged workers self identify as having stopped looking for a job, they are no longer included in the unemployment figures used by the BLS to determine Fed-Ed eligibility. If a fraction of these workers had identified themselves as seeking work, the Fed-Ed relief would have continued to flow into California.

If the state edges back across that threshold in the coming months, Fed-Ed money will flow into the state again, but those recently cut from the unemployment roles who did not exhaust their Fed-Ed eligibility time will not qualify to be re-added to the program.

The program's loss could have a significant impact on the state's economy going forward.

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