‘Fiscal cliff’ could slash benefits for unemployed

Local residents drawing unemployment insurance benefits may not have medical coverage after this weekend.

Unemployment insurance benefits expire Saturday for thousands of out-of-work Minnesotans if Congress doesn’t renew a program that gives extra aid to those who have exhausted their six months of state unemployment checks.

That could cause ripple effects locally if lawmakers don’t return to Washington to strike a deal on the so-called fiscal cliff after leaving last week.

The move could cause an influx of people in need of services at Workforce Development Inc. in Austin, but staff there say it will depend on where each person is at in his or her unemployment, as well as where each person is in finding a new job.

“It’s possible that we’ll see people showing up,” said Stacy Edland, placement specialist at Workforce Development.

Edland said on average about 1,500 to 2,000 people visit Workforce Development Inc. each month to use the center’s resource room or enroll in Workforce Development services.

 

The career planning and skill training center’s total clients has decreased in recent years as unemployment numbers have declined.

Unemployment benefits have become a bargaining chip in the stalled negotiations between the White House and congressional Republicans.

Allowing the benefits to expire could save the federal government $30 billion, but the cost to 12,200 Minnesotans would be steep.

“They’re not going to be able to pay the rent, they’re not going to be able to pay utilities and it’s the middle of winter,” said Maurice Emsellem, a policy analyst for the National Unemployment Law Project.

Federal funding for jobless aid nearly tripled during the recession, rising from $33 billion in 2007 to $94 billion in 2012.

In 2008, Congress created the Emergency Unemployment Compensation program. It offered up to 53 extra weeks of benefits to the long-term unemployed, with aid varying by state depending on unemployment rates.

In Minnesota, the unemployment rate is two points lower than the national average. The program here offers 14 extra weeks of unemployment checks those who have exhausted their first 26 weeks. Last month, state officials began notifying the 12,200 people who will see their benefits expire, said Blake Chaffee, a spokesman for the Minnesota Department of Employment and Economic Development.

There were 606 Austin residents actively looking for work last month, the lowest since there were 583 in November 2008, according to data from the Minnesota Department of Employment and Economic Development. The 4.5 percent non-seasonally adjusted unemployment rate is the lowest since May of 2008’s mark of 4.4, and is now comfortably within Austin’s pre-recession range of roughly 4 to 5 percent. November is the third-straight month the rate dipped below 5 percent, and the fifth time this year.

 

—The Associated Press contributed to this report.

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