California unemployment claims drop below 500,000 in May - Orange County Register

California unemployment claims drop below 500,000 in May - Orange County Register

California unemployment claims fell below 500,000 in May for the first time since February 2009, according to Employment Development Department numbers.

EDD staff processed 497,301 claims in May, 47,000 fewer than in May 2011 and 152,000 fewer than in May two years ago when the number of people on various extensions of unemployment was peaking.

Part of the decline was due to an improving job market — statewide employers added 33,900 workers in May, and the total number of laid-off workers fell to just under 2 million for the first time since April 2009. (Total unemployed is higher than claims processed because thousands of people are out of work who never were eligible for benefits or have since exhausted their aid.)

But the May numbers also reflect the first month that maximum unemployment benefits were cut from 99 weeks to 79 weeks.

The cutoff kicked in the week after May 12. EDD estimates 93,000 laid-off workers got dumped from the unemployment rolls when the reduction in maximum benefits took effect. All told, nearly 794,000 Californians have exhausted their unemployment aid since Congress first approved extended benefits in 2009.

Total payouts for unemployment have declined along with the number of benefits processed.

California paid out $1.3 billion in unemployment checks in May — about $57 million a day. That compares to $1.9 billion during the peak in May 2010 ($93 million a day.)

In May 2007, before the recession, the state paid out $439 million benefits for the entire month.

The payouts will have to drop a lot more to get California’s unemployment trust fund out of serious trouble. The fund is expected to be $10.3 billion in the hole by the end of next year.

California has been paying unemployment benefits for the last three years by borrowing from the federal government. The state now owes Uncle Sam $8.9 billion.

The state Legislative Analyst Office estimates California will have to pay the federal government $3 billion over the next 10 years just in interest payments on the borrowed funds.

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Source: economy.ocregister.com