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April 26, 2011
PA Unemployment Rate Drops; Benefits Curtailed

Pennsylvania’s 3-month average unemployment rate dropped in January to 8.4 percent, resulting in a reduction in the maximum duration of federal unemployment benefits from 99 weeks to 93 weeks after April 2, 2011. The lower unemployment rate disqualified Pennsylvanians from the additional 6 weeks of benefits available through Tier 4 of the federal Emergency Unemployment Compensation (EUC) program. Pennsylvanians may continue to qualify for EUC Tier 1 (20 weeks), Tier 2 (14 weeks) and Tier 3 (13 weeks) benefits, as well as 20 weeks of state extended benefits, while those programs remain in effect.

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“Many factors have contributed to this statistical drop in the unemployment rate,” said Pennsylvania Department of Labor & Industry acting Secretary Patrick Beaty. “We are encouraged to see Pennsylvania’s economy creating more job opportunities.”

While any improvement in the state’s employment outlook is welcome news, it will take more than an 8.4 percent unemployment rate to salvage Pennsylvania’s depleted unemployment trust fund. Kevin Shivers, Pennsylvania director of the National Federation of Independent Business (NFIB), noted in a position statement, “Pennsylvania owes the federal government $3 billion, which is a very deep hole from which to dig out.”

To ease the repayment burden on employers, NFIB has called for a repeal of the 2009 federal mandate that requires states to expand benefits in order to receive federal unemployment funds. It also supports extending the grace period on state loans from the federal unemployment trust fund to allow employers to repay them without interest and penalties.

NFIB also opposes raising the taxable wage base to $12,000, as some state lawmakers have proposed. Doing so would raise employer payroll taxes by over $100 per worker and result in roughly 15,000 lost jobs, NFIB estimates. “It is difficult to imagine a more powerful disincentive . . . than a massive tax penalty for hiring new workers,” Shivers said.

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