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Editorial: Move quickly to help unemployed

Enact Unemployment Insurance Modernization Act.

Last update: November 21, 2008 - 6:11 PM

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WHERE THE JOBS ARE -- AND AREN'T

One-year employment change by metropolitan statistical area:

•Mpls.- St Paul: -14,600

•Duluth-Superior: -1,200

•Rochester: +600

•St. Cloud: -300

• Fargo-Moorhead: +1,300

• Grand Forks: +600

Source: Minnesota Department of Employment and Economic Development

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The recent release of state and U.S. unemployment rates is just the latest indication that the global economic crisis is quickly becoming an employment crisis as well.

Nationally, new claims for unemployment benefits last week spiked to a 16-year high of 542,000, which brings the four-week average to 506,500. Those are the worst numbers in 25 years, and it's likely November's unemployment rate will go even higher than October's 6.5 percent.

Minnesota's figures also reveal troublesome trends. Another 7,500 jobs were cut in October, which pushed the unemployment rate up to 6 percent statewide. Hit hardest over the last year were jobs in construction, which has contracted along with the mortgage meltdown. Overall, 6,700 construction jobs, or 5.2 percent of total state construction employment, have been lost. Few of these jobs are likely to return until the housing crisis, which is the root cause of the financial crisis, is addressed with more vigorous public policy.

Most economists believe the jobs outlook won't brighten until the economy begins to turn around, which could be well into next year, or even not until 2010. Headlines like Citigroup's plan to lay off more than 50,000 workers will only add to the total. And in the process, decreased consumer confidence will only exacerbate the economic downturn.

While there is little that national officeholders can do to immediately get people back to work, our representatives in Washington can take steps to cushion the unemployment blow.

A first key move happened this week when President Bush signed a bill to extend unemployment benefits another seven weeks. This is on top of the standard 26 weeks and 13-week extension that had already been approved this year.

The Senate should take another important step and pass the House's version of the Unemployment Insurance Modernization Act. If enacted, it would give incentives to states to more closely align unemployment insurance eligibility rules. Nationally, according to U.S. Department of Labor statistics, only 37 percent of workers who are unemployed receive benefits. Many of those falling between the eligibility cracks are low-wage workers who may be on the precipice of poverty.

Wide disparities exist between states that have and those that haven't adopted the "alternative base period" (ABP) standards that are required to receive the federal funds. In Minnesota, which has enacted a portion of the ABP, an estimated 39 percent of those unemployed receive benefits, while just over the border in Wisconsin, which has full compliance, 53 percent do. In South Dakota, which has not adopted an ABP, there is only an 18 percent recipient rate.

Minnesota officials, aware of the bill's benefits, are well positioned to move on any further requirements. If Congress passes the act and the state is in full compliance, Minnesota stands to receive up to $141 million in incentive funds, as well as $9.9 million for administrative costs.

Passing the Unemployment Insurance Modernization Act would help the unemployed and the economy. It should be among the first bills awaiting President Obama on Jan. 20, 2009, if it doesn't get to President Bush sooner.

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