PrintPrintThe S.C. Employment Security Commission expects it will have to tap into a $15 million federal line of credit in order to pay benefits through the year’s end. Currently, the state is paying out between $10 million and $12 million a week in benefits to some 65,000 unemployed workers, up from about 40,000 workers receiving benefits this time last year.
By Molly Parker
mparker@scbiznews.com
Published Dec. 8, 2008
The climbing jobless rate in South Carolina is sucking the state’s unemployment fund dry.
The S.C. Employment Security Commission expects it will have to tap into a $15 million federal line of credit in order to meet unemployment obligations through the year’s end.
The state does not expect to furlough any payments, but it might be forced to pay interest on the U.S. Department of Labor credit line, said Allen Larson, executive director for unemployment insurance at the state commission.
“With what we’re paying out right now, if I had to guess, I’d say we wouldn’t make it,” Larson said.
Unprecedented payout
Larson said a little more than $30 million remained in the trust fund. The state is mailing out anywhere between $10 million and $12 million a week in unemployment benefits to some 65,000 people, he said.
During this time in 2007, he said, the state was paying out about $7 million a week to roughly 40,000 unemployed workers.
Unemployment benefits are generally about 50% of a person’s most recent salary, up to $326 a week.
“This is unprecedented,” Larson said. “We’ve never seen these kinds of figures before.”
More layoffs coming
And those numbers might soon grow. A host of large employers across the state have just announced plans to collectively slash hundreds of jobs during the first few months of 2009.
In the Pee Dee, JP Morgan Chase plans to eliminate about 500 jobs from the Washington Mutual mortgage processing operation in Florence as part of its WaMu takeover. In the Upstate, sock manufacturer Renfro Corp. is shutting down its Whitmire plant, eliminating 570 jobs. Last week, Bosch Corp., an automotive parts company, said it has extended a buyout offer to all of its 2,100 North Charleston employees, with layoffs possible later.
A decline in revenue streaming into Columbia is forcing state institutions and agencies to pare jobs as well.
Fire delays some filings
Adding to the agency’s woes, The utility pole serving the Employment Security Commission office caught fire early Sunday. The damage has been repaired, and the agency is hoping that delays of unemployment checks will be minimal.
Power was interrupted until midafternoon, Larson said. Backup systems made it possible to shut down the system without losing any data, but the phone system for filing new claims was unavailable.
Once reopened, the phone lines were kept open until midnight, and then reopened at 4 a.m., to try to serve anyone who had not been able to get through, Larson said. He said that a person whose attempt to file was delayed by the outage might see a day’s delay in his or her check.
2.5 million jobs gone
On Nov. 21, President Bush signed into law a measure offering a seven-week extension to those who have maxed out their 26-week benefits. Workers in states where the unemployment rate is above 6% are eligible for a 13-week extension. That’s on top of a 13-week extension that went into effect in July.
South Carolina’s unemployment rate soared above 8% in October.
A report released today by the National Conference of State Legislatures said that more than 2.5 million jobs have disappeared across the country so far this year, and close to 4 million unemployed workers currently receive unemployment benefits.
The U.S. Department of Labor reported Friday that the national economy shed 533,000 jobs in November. It was the largest monthly drop in jobs since December 1974.
‘Critical shortfalls’
South Carolina joins a list of five states facing “critical shortfalls” in their unemployment trust fund accounts. Indiana, Michigan, New York, Ohio and South Carolina all had less than three months’ worth of benefits in reserve as of Sept. 30.
The U.S. Department of Labor recommends that states maintain a balance to sufficiently cover benefits for one year during a typical recession.
An additional eight states — Arkansas, California, Kentucky, Missouri, New Jersey, North Carolina, Rhode Island and Wisconsin — had reserves of less than six months. Six states — Connecticut, Idaho, Illinois, Massachusetts, Minnesota and Pennsylvania — had less than a year in reserve, according to the National Conference of State Legislatures report.
States pay for unemployment benefits through payroll taxes levied on employers. Those taxes are deposited into the federal Unemployment Trust Fund, which maintains a separate account for each state. The shortfalls are caused by an increase in claims for unemployment benefits coupled with a decrease in payroll tax revenue because of the job losses.
The federal government is paying for its extension offers, Larson said, and has offered a loan option to states at risk of running short.
Reach Molly Parker at 843-849-3144.
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