The JOBS Act Creeps Forward

As expected, the JOBS Act we [previewed]( earlier this week received a passing vote in the House Ways and Means Committee yesterday, giving states the option to use the money they receive from the federal government for extended unemployment benefits elsewhere. GOP lawmakers expect cash-strapped states will divert the cash toward deficit reduction, which they see as a more pressing goal.

[According]( to Committee Chairman **Dave Camp**, this makes sense because even laid-off workers in states like North Dakota, where the unemployment rate is low, can access these extended benefits for up to 60 weeks. They seem to forget that states with large deficits are usually the ones struggling the most in the recession and which have the highest rates of unemployment. North Dakota, for instance, is one of only [two states]( with a surplus, so letting it divert its extended benefit transfers will hardly be a boon to its fiscal stability.

Florida is a case in point. It’s facing a $3.6 billion budget deficit in 2012, the equivalent of 14.9 percent of its total budget for the year. It nonetheless announced this week that it will scale back state unemployment benefits, tying them to its unemployment rate. Currently the state pays benefits for the first 26 weeks of unemployment, which, until recently, was standard across the country. Under the new law, the state will only pay benefits for the first 12 weeks if the unemployment rate is five percent or below. The maximum Floridians could receive is 23 weeks if the rate is above 10.5 percent. Florida’s unemployment rate is currently 11.1 percent, so benefits will only be cut by three weeks, which is significant but not as bad as the 14 by which they would be cut if the rate was five percent. The scale of the cuts is alarming though. Benefits will start to be cut once unemployment reaches 10.4 percent, which is still an extremely high rate.

Beyond imposing unfair cuts on an already-struggling workforce, Florida shows that in the current political climate, if states are given the opportunity to divert federal funds away from low income residents, they’ll probably take it. Unfortunately, states that give in to that temptation will just end up hurting their economies further, as diverting extended benefits toward debt payments takes the money out of the economy, slowing GDP and killing more jobs (as many as 322,000 nationwide [according]( to EPI). The JOBS Act will never pass the Senate to become law, but it sends a signal to states that it's ok to cut worker supports, ultimately letting states perpetuate high unemployment while robbing their unemployed of the support they need to maintain a decent life.