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Many unemployed facing early end to benefits

8:58 PM, May 28, 2012   |    comments
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More than 100,000 Americans out of work longer than a year in six states and Washington, D.C., are expected to lose their unemployment checks this summer, pushing the total cut off this year to more than 500,000.

Economists say the cutbacks will lower the unemployment rate but hurt consumer spending.

Affected are extended benefits, paid by the federal government, which provide an additional 13 to 20 weeks of payments to those already out of work 60 to 79 weeks. Congress mandated the reductions this year and they join other cuts in place or coming.

Some states have trimmed even initial benefits to less than 26 weeks, and some have limited eligibility. Florida residents must apply online and take a lengthy skills test.

Starting next month, many states will reduce the second phase of benefits, which aids people unemployed for 26 to 79 weeks. That is expected to affect several hundred thousand by year's end.

The portion of the jobless receiving payments recently fell below 50%.

Many states are ending extended benefits, as required by federal law, because their unemployment rates are no longer rising.

From June through August, New York, West Virginia, New Jersey, Nevada, Rhode Island, Idaho and Washington, D.C., will end extended benefits, according to the National Employment Law Project. Those cuts will affect about 116,000 recipients. From January through May, 419,000 Americans in 27 states lost payments.

Despite an improving job market, those out of work the longest struggle most to find jobs.

"You're going to be depriving a lot of people ... of the basic income they need to feed their families," says NELP attorney George Wentworth.

Many who lose payments will have to take jobs for which they're overqualified, says Barclays economist Michael Gapen. Many older Americans will leave the labor force because they won't have to meet state requirements to look for work to receive checks. Both trends should cut unemployment by half a percentage point the next year, says Mark Zandi of Moody's Analytics.

But the loss of benefits will hurt consumer spending and shave up to two-tenths of a percent off economic growth, Zandi says.

Joe Sangataldo, 54, of Vineland, N.J., has applied for about 200 jobs since late 2010. After he loses his $407 weekly check in July, the former job trainer says, "I'm going to clean bathrooms" if necessary.

By Paul Davidson, USA TODAY

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