Recession, employer rate cuts have depleted fund
May 14, 2012
FOR IMMEDIATE RELEASE
CONTACT: Sharon Kayne, Communications Director, NM Voices for Children, 505-244-9505
ALBUQUERQUE—New Mexico’s unemployment insurance (UI) trust fund—which pays benefits to the unemployed—should be rebounding at this point in an economic recovery. It’s not and that is due in part to a decrease in the rates employers pay into the fund. That’s according to a new report, “The Need to Strengthen New Mexico’s Unemployment Trust Fund,” from the NM Fiscal Policy Project, a program of NM Voices for Children.
“It’s normal for the UI trust fund balance to plunge during a recession when it is paying out increased benefits because unemployment is high,” said Gerry Bradley, Research Director for the child advocacy group and the report author. “Unemployment has been leveling out, but the fund balance continues to drop. This will pose a serious problem when the next recession hits and the fund is unable to do its job—which is to keep a recession from becoming a full-blown depression.”
UI benefit payments began to decline in 2011 in part because unemployment rates had begun to fall, but also because benefits for parents and students were cut. At the same time, the rates that employers were paying into the fund were also cut.
“This rate cut for employers essentially came at the expense of children, college students, and other beneficiaries,” Bradley said. “Even though the economy is slowly improving, New Mexico’s working families are still struggling and this is no time to poke holes in the safety net.”
Unemployment insurance helps keep a recession from getting worse because it injects money into the economy via consumer spending. Without it, recessions would be deeper and last longer. The benefits help workers who have been laid off feed their families and pay their bills until they can find another job.
The report also notes that the majority of New Mexico’s UI beneficiaries have been young Hispanic males. “Construction jobs took the biggest hit in this recession and a large percentage of workers in that sector are young Hispanic males,” said Bradley. “Unfortunately, even given a full recovery, construction employment will not return to pre-recession levels for a very long time.”
The report is available online here: https://www.nmvoices.org/wp-content/uploads/2012/05/UI-trust-fund-report-5-12.pdf
New Mexico Voices for Children is a nonpartisan, nonprofit organization advocating for policies to improve the health and well-being of New Mexico’s children, families and communities.
2340 Alamo SE, Suite 120, Albuquerque, NM 87106-3523; 505-244-9505 (p); www.nmvoices.org