Lower Minnesota jobless rate triggers a benefit cut

  • Article by: JENNIFER BJORHUS , Star Tribune
  • Updated: December 29, 2011 - 9:24 PM

Final 13 weeks of "federal-state extended benefits" will be phased out starting Jan. 14.

In a blow to thousands of jobless Minnesotans, the state announced Thursday that it will start phasing out the final 13 weeks of unemployment benefits effective the week ending Jan. 14 because the state's three-month average unemployment rate has fallen below the 6.5 percent threshold.

The state Department of Employment and Economic Development, which handles unemployment, began mailing letters earlier this month to about 7,000 applicants who might be affected, it said. The actual number of people who will be affected is expected to be lower than that, the department said.

The cut in the special 13 weeks of so-called "federal-state extended benefits" hits the state's long-term jobless. It was triggered by federal rules that require a state's three-month average unemployment rate to be at least 6.5 percent to make the final insurance round available. Nine other states are losing their extended benefits too because of the trigger.

The move was expected after a big drop in the state's unemployment rate was reported Dec. 15. Minnesota's jobless rate had been 6.9 percent in September and 6.4 percent in October. By falling to 5.9 percent in November, the state's three-month jobless rate average is 6.4 percent -- below the 6.5 percent threshold.

Unemployed Minnesotans may still be eligible for up to 73 weeks of combined state and federal unemployment benefits, the department said. About 118,000 people are currently requesting unemployment benefits in Minnesota on a weekly basis, according to the department.

The fate of the final 13-week chunk of jobless benefits is separate from the issue of extending emergency federal unemployment benefits that lawmakers in Washington, D.C., were fighting over.

On Dec. 23, Congress cleared a temporary two-month extension of the payroll tax holiday and emergency federal unemployment benefits, both of which had been set to expire shortly after the new year. About 43,000 Minnesotans are receiving some form of extended emergency aid.

Drag on recovery expected

Steve Hine, the state's top labor economist, said Thursday it's not clear exactly how many Minnesotans will be affected by the phase-out of the final 13 weeks of payments. But the loss of that income is certain to create some drag on the economic recovery, he said.

"Those dollars translate very highly into expenditures," Hine said. "Anything right now that reduces those purchases is going to have a dampening effect on the economic recovery."

Anticipating the cut to the final 13 weeks of jobless payments, Gov. Mark Dayton asked Minnesota's congressional delegation to temporarily lower the trigger point in the state's unemployment rate to 5.5 percent. Gov. Dayton's staff was not available Thursday for comment.

Jennifer Bjorhus • 612-673-4683

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