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Several states say they are running out of unemployment money

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Several states are reporting that with the rate of unemployment continuing the way it is, they will most likely run out of unemployment benefits by the end of this year.

“This is an unprecedented crisis,” Jared Walczak, state tax policy director for the nonprofit Tax Foundation told Newsy. “We have, during really the entire history of the unemployment compensation system, not seen something quite like this.”

According to the report, there is no federal requirements for the amount of money states need to keep in their unemployment trust funds so many states were left largely unprepared for such a large number of residents to file for benefits.

Over 22 million people have filed for unemployment since the start of the pandemic and many more will likely follow.

“People have lost their jobs in a very short period of time,” Walczak said. “The state systems are overloaded. They’re having trouble even processing claims, getting the money out the door. But it is overwhelming those systems. It is overwhelming their finances.”

Wyoming is the only state that has reported that they will be able to maintain their benefits after a year’s time.

California, New York, and Ohio say they could be out of money by the end of April.

In order to continue providing for those who are out of work, states will be able to take out interest-free loans from the federal government, however, the loan must be paid back within two years, and may become an extra burden for taxpayers.