Unemployment Compensation Time Bomb Set to Explode
Unemployment woes are back in the news. With benefit extensions up for debate, a much bigger unemployment problem is on the horizon.
Pennsylvania’s unemployment compensation fund is bankrupt, but so far has been spared interest payments . Come January, that will change as Harrisburg will begin paying 3.9 percent interest on its debt.
Pennsylvania owes the federal government more than $3 billion for unemployment compensation. That puts the state in the top five, behind California at $8.8 billion, Michigan at $3.8 billion, and New York at $3.2 billion.
With unemployment taxes already increasing for employers in 2010, and likely to rise again in 2011, politicians would be unwise to look for more revenues from job creators.
Pennsylvania needs to reduce its overly generous benefits and eligibility, reduce UC fraud or find enough cuts elsewhere in the state budget to build up the UC fund. Any way you slice it, the governor and Legislature will need to display a large amount of backbone to fix PA’s unemployment mess.