With unemployment claims reaching their highest levels in decades, states are running out of money to pay benefits, and some are turning to the federal government for loans or increasing taxes on businesses to make the payments.<\/p>\n
Thirty states are at risk of having the funds that pay out unemployment benefits become insolvent over the next few months, according to the National Association of State Workforce Agencies. Funds in two states, Indiana and Michigan, have already dried up, and both states are borrowing from the federal government to make payments to the unemployed.<\/p>\n
Unemployment taxes are collected by states from employers, but the rate varies from state to state per employee. In good times states build up trust funds so that when unemployment is high there is enough money to cover the requests for benefits, which are guaranteed by the federal government.<\/p>\n
\u201cYou don\u2019t expect the loans to happen this early in a jobs slump,\u201d\u009d said Andrew Stettner, the deputy director of the National Employment Law Project, an advocacy organization for low-wage workers. \u201cYou would expect that the states should, even when they are not well prepared, to have savings.\u201d\u009d<\/p>\n