Almost half a million Georgians receiving unemployment checks — should we cut their benefits?

487,471 Georgians are receiving unemployment checks right now. That’s a staggering number for a state with less than 10 million people.

Almost 15% of residents over the age of 18 are currently receiving unemployment benefits.

Right now, the highest weekly checks are $330, but it looks likely that benefits will be reduced by about 9% to allow the state to repay a loan from the federal government.

From the AJC’s Georgia may cut jobless benefits to pay off federal loan:

Georgia owes the federal government $721 million in loans it took out to maintain its unemployment benefit fund. There are 487,471 Georgians drawing unemployment checks, according to a state report released Thursday. The Great Recession has created a pool of long-term jobless — about 256,900 in Georgia — who have been out of work at least 27 weeks.

[State Labor Commissioner Mark] Butler wrote a check for $21.4 million on Oct. 1 but said changes are necessary to help Georgia pay off the loan. Cutting benefits would allow Georgia to settle the debt in 3-5 years, he said.

Each year that Georgia holds a balance on the loan, the amount of federal unemployment tax on Georgia businesses will go up, Butler said.

Not surprisingly, this situation has in part been fueled by poor planning:

Georgia makes weekly payments to workers, laid off by no fault of their own, from its unemployment insurance reserve, normally funded by employer taxes. But in 2000, amid low unemployment, the General Assembly declared a “tax holiday, ” which lasted through 2003, absolving most employers from paying the tax.

The reserve fund fell from $2 billion to $703 million in late 2003. Although employers were supposed to refill the fund once the holiday expired, legislators repeatedly granted them additional tax breaks.

As one advocate for the jobless notes in the piece, any reduction in benefits will hurt consumer spending since the vast majority of a laid off worker’s unemployment benefits are spent. Any cuts at all will put even more downward pressure on the economy. Trying to get more money out of businesses will create some drag there, of course.

Butler is also considering reducing benefits in other ways, including cutting the number of weeks of eligibility.

If more Georgians are forced to find some sort of work through unemployment benefit cuts, some will in fact find work — in many cases jobs that they will take from younger or less-qualified workers. We simply don’t have enough jobs to employ all those who are actively looking for work, much less those who have given up and aren’t counted in the state’s 10.3% unemployment rate.

While this is a difficult situation, I’m sorry to see the state once again apparently headed for cuts rather than strategic thinking about how to solve our larger problems.