Officials Reduce Federal Unemployment Benefits

CHICAGO – Weekly unemployment insurance benefits to the long-term unemployed will be reduced 16.8 percent as a result of federal sequestration’s across-the-board budget cuts, the Illinois Department of Employment Security reminded today.

The reduction will be reflected in payments beginning June 10 for those collecting federally funded Emergency Unemployment Compensation (EUC). U.S. Department of Labor officials tell IDES the reductions will end September 30, the end of the federal fiscal year.

Approximately 80,000 individuals collect federal unemployment compensation. The average weekly benefit will be reduced by about $51. State benefits, which are funded through a payroll tax, will not change. State benefits represent the first 25 or 26 weeks of unemployment insurance compensation, depending upon when the claim was initiated. Federally funded EUC benefits are paid after state benefits.

The reduced unemployment benefits comply with the 10 percent automatic sequestration cuts the federal government put in place if a budget deal were not reached between Congress and President Obama’s administration. Sequestration began March 1. The federal fiscal year is October 1 through September 30.

Benefit payments will be reduced by 16.8 percent, rather than 10 percent, because the cuts must be spread across four months, rather than 12 months. The reduction cannot be appealed.

The sequestration amount was posted to the IDES website in March. IDES contacted customers in May to confirm they knew their benefits would be reduced and to inform them of the new weekly amount.

The unemployment rate identifies those who are out of work and seeking employment. The rate does not reflect individuals collecting unemployment insurance benefits. A person who exhausts benefits, or is ineligible, still will be reflected in the unemployment rate if they actively seek work.

Historically, the national unemployment rate is lower than the state rate. The state rate has been lower than the national rate only six times since January 2000, includin g times of expansion and contraction.