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California jobless payouts near $11 billion

August 28th, 2009, 3:00 am · 40 Comments · posted by Mary Ann Milbourn

California paid out nearly $11 billion in unemployment benefits in the seven months through July of this year as initial jobless claims and requests for extensions mounted, reports the state Employment Development Department.

In all of 2008, unemployment benefits totaled $8.1 billion, which at that point was a record.

cga41This year's payouts soared in part because of the number of jobless workers applying for up to three extensions in benefits.  An extra $25 a week from the stimulus package approved by Congress in February also has added to the costs.  Current weekly benefits range from $65 to $475, including the extra $25.

EDD payouts for the initial 26 weeks of benefits went from just under $4 billion in the first seven months of 2008 to $6.9 billion this year.

There were no $25 weekly supplemental payments last year, but this year the state has paid $613 million for the extra benefit.

First extensions ballooned from just over $48.3 million through July of 2008 to $2.2 billion this year. Second extensions added $873 million to the cost and third extensions another $421 million.  Neither of the last two were available in the first seven months of 2008.

Checks totaling $80 million in jobless benefits are now going out every day.

Meanwhile, the state's unemployment insurance trust fund ran out of money in January. The state is only responsible for picking up the first 26 weeks in benefits.  It is borrowing from the federal government to make those payments.

Federal funds cover the three extensions and the $25 weekly supplement in benefits.

Loree Levy, an EDD spokeswoman, said the trust fund currently is about $2.5 billion in the red. The state forecasts it will be $6.4 billion in the hole by the end of the year.

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 40 Comments

  • 0311 says:
    August 28, 2009 at 6:49 am

    That's a lot of money, but I feel sorry for the folks who lost their jobs, not the ones abusing the system. The government should help people get back on their feet, not provide for them forever. So create some private sector jobs, OBAMA.

    • Sparkles says:
      August 28, 2009 at 8:24 am

      This explains why house prices and sales are "skyrocketing" in OC.

    • StivBators says:
      August 28, 2009 at 9:18 am

      Not his job to create private sector jobs, private sector needs to get off of the free trade bandwagon and bring the jobs that they sent to India, China and Mexico back to the USA. Its become a race to the bottom started by Regan perpetuated by Clinton and given steroids by g.w. bush. No recovery will be possible if the only work available is McDonald's and Walmart. Remember when we USED to build cars, airplanes and appliances in the US? Those jobs paid good wages and provided decent benefits. Now with all of the free trade and globalization big corporations took those jobs from us and gave them to communist Vietnamese, Communist Chinese and Mexicans, they have no loyalty to this country at all and their only concern is profits for the shareholders and $10,000,000 salaries for execs. Get used to it, WE ARE THE NEW THIRD WOLD COUNTRY IN THE MAKING.

    • BeyondTheMargin.net says:
      August 28, 2009 at 11:15 am

      No wonder we are in the hole! We have one of the worst unemployment rates in the country. Go figure with how well our state is managed...

      http://www.beyondthemargin.net/2009/03/california-doctrine.html

  • Jimbo says:
    August 28, 2009 at 7:06 am

    Start charging the 50 million people who ENTER the U.S. yearly at the San Ysidro (Tijuana) border an admission fee ( $20). Also, the 17 million commercial vehicles ($30) that enter yearly. Do you pay a co-pay every time you go to the Doctor ? I do too. We'll just collect their co-pay in advance. Call your Congressman...I did.
    America....the land of the free. Not free admission !

    • ocobserver says:
      August 28, 2009 at 8:51 am

      Agreed jimbo. I will call my politcial reps today about this. If they can charge $72 to get into Disneyland charging money to get into our country is a grand idea. However, I think a yearly pass should be more like $100. Disney charges what? $350 or more? Good idea.

  • Hank says:
    August 28, 2009 at 7:12 am

    Just think what if California did not have that 11B injected. We are in a world of hurt.

    • Bryan says:
      August 28, 2009 at 7:23 am

      My sentiments exactly. That $11B gets re-injected into the economy at almost 100% because people on unemployment aren't saving it, they need it for day to day survival. So part goes back to the state and local gov't in sales taxes, unemployment is lower therefore more income taxes being paid (more people would have lost the jobs with out the unemployed spending that $11B), housing prices are higher than they otherwise would be (fewer foreclosures because the unemployed can stand a better chance of paying their monthly mortgage) and the list goes on.

      So yes, the state spent $11B, but that is the GROSS, not the NET output. Someone ought to have a formula to see what the NET COST was after the state and economy reap the benefits of that $11B.

      • aksteve says:
        August 28, 2009 at 8:20 am

        Ya, sweet, good point. EVERYONE GO ON UNEMPLOYMENT, it helps the state!
        (tongue in cheek)

        Bryan, you are either on unemployment and justifying it, or a left wing psycho. Or both.

        • Bryan says:
          August 28, 2009 at 12:51 pm

          Typical right wing response to logic, I noticed that rather than presenting any argument against anything I said, you chose to make a snide comment and then attack me personally.

          No, I'm neither. And no, I didn't imply everyone go on unemployment. I merely suggested that unemployed people with a financial safety net tend to spend it, which helps temper some job loss, and some winds it's way back. That $11B is not just a one way ticket, it benefits everyone in some small way.

          The gross vs. the net are two different things, and this article only told of the cost, not the benefits to society.

          Can you point to anything in particular I said in my post that is not true? Or do you just wanna make fun and call names today?

      • Gulliver says:
        August 28, 2009 at 8:56 am

        Good God! Is this Mars logic?

        The biggest case against Democracy is a 5 minute conversation with the average voter. I'm surrounded by idiots.

      • cwright says:
        August 28, 2009 at 9:11 am

        please, stop trying to justify your unemployment.

        at least i am shamless enough to admit the my "re-injection" of $475 a week goes to my indian friends in temecula.

      • AG says:
        August 28, 2009 at 10:19 am

        You do realize that sooner rather then later we all will pay for this ponzi scheme?

  • AG says:
    August 28, 2009 at 7:57 am

    If there is a free lunch somewhere you can bet your @$$ people will line up for it and they will keep coming back forever. Why bother looking for a job, right?

    I have a friend who lost his job back in January. He gets the max in unepmloyment, something around $450.00 a week. There are jobs around that pay $15-17 an hour but he doesn't even consider it because he gets more money, after taxes, from the unemployment check.

    We are in a different world now. The socialist mentality is winning over the people and there is no way to turn this around, not at least in the next four years. By then, it could be too late, I think.

    • Sparkles says:
      August 28, 2009 at 8:23 am

      The socialism starts with "free market" capitalists who demand government bailouts. When the big boys belly up for freebies, why shouldn't everyone else?

      Thanks Hank Paulson and company!

      • AG says:
        August 28, 2009 at 8:40 am

        Are you saying that everyone in Washington DC is a thief an a liar?

      • HateTheConservitiveLiars says:
        August 28, 2009 at 9:36 am

        Free market is a lie!!!! It has been shoved down your throats by CON servitives and you swallowed. Its all about driving YOUR wage down to meet the wages of Mexico and China folks. HAHAHAHA you ate it hook line and sinker, now let it fester in you belly while you beg to get work and the employer tells you OK but $10.00 an hour no medical and no vacation. SUCKERS

    • Bryan says:
      August 28, 2009 at 12:58 pm

      $15 an hour is $600 a week before taxes. Unemployment is also taxed, so how does he make out better being taxed on $450 a week vs. $600 a week?

      • AG says:
        August 28, 2009 at 2:13 pm

        If I understand correctly, you have a choice to pay taxes now or later. He says that he would rather pay later because he needs money right now.

        I am not defending him. All I am saying that this socialist system designed in such a way that it absolutely destroys the animal spirit that made this country great. All in the name of compassion we are slowly but surely digging our own grave.

        Below is a quote that attributed to Alexander Fraser Tytler. True or not but it seems that this is exactly what we got here.

        A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. The average age of the world's greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:

        From bondage to spiritual faith;
        From spiritual faith to great courage;
        From courage to liberty;
        From liberty to abundance;
        From abundance to complacency;
        From complacency to apathy;
        From apathy to dependence;
        From dependence back into bondage.

        • Bryan says:
          August 28, 2009 at 2:50 pm

          He can take that $600 a week job, and pay taxes on that later as well. You can claim married with 10 dependents and pay taxes on April 15, whether it's unemployment or wages.

          If he needs the money now, he's still better off taking the $15 per hr.

          Maybe your friend is not so smart.

          If your friend truly needs the money, he would take the $15/hr job.

          You do realize, don't you, that unemployment is largely paid for by employers? They pay unemployment taxes, in the event they can no longer sustain their work force.

          Your friend, if he is colllecting $450 a month, was a high wage-earner. Unemployment is based on what you earned and how long you earned it. Not everyone get's the full $450.00. His employer paid for a lot of what he is receiving. When unemployment get's too high, out of whack if you will, the the gov't kicks in. But in good years, the unemployment fund takes in more than it pays out.

          I guess the question is:

          Should we do away with unemployment benefits?
          Should we do away with Social Security?
          Should we do away with MediCare?
          Should we do away with MediCaid?
          Should we do away with Food Stamps?
          Should we do away with Disability?

    • dean says:
      August 29, 2009 at 9:51 am

      YES! YES! YES! YES! YES!

  • Bryan says:
    August 28, 2009 at 3:04 pm

    I have taken a little bit of heat on this blog for my original post. That's fair, all I ask is that you challenge my assertions, rather than make snarky comments and/or personal attacks. Because, as an American, I love true debate and look for honest resolution towards our differences.

    So, I'm going to wrap up my offensive comments in a nutshell, and ask any and all who disagree, to counter my point(s) with specific facts:

    Point #1: People on unemployment spend that money
    Point #2: People on unemployment pay sales taxes for purchases
    Point #3: People on unemployment mitigate further unemployment
    by paying stores that sell necessities and hire clerks
    Point #4: People on unemployment stand a better chance
    of paying their mortgage, avoiding foreclosure, which
    hurts every homeowner
    Point #5: People on unemployment, pay income tax on unemployment

    If not for unemployment compensation, unemployment would be higher, tax receipts would be less, the housing market would be worse and income tax receipts would be lower.

    Okay....challenge me here, I love to learn and try to keep an open mind. Enlighten me....ANYONE!

  • sangell3 says:
    August 28, 2009 at 4:52 pm

    Bryan, its like using your credit card to pay today's expenses. Yeah, it helps but at the end of the month the bill comes due. The money that California is borrowing today will have to be paid back. That means that all the benefits accruing to today from the loan will have to be subtracted
    from tomorrow. Worse, it could well be we've entered a deflationary cycle which makes debt even more burdensome.

    California is accumulating huge obligations with its generous unemployment compensation. Employers are noticing too. Why do you think Toyota is pulling out of Californa. They don't want to be here when the bill comes due.

    • Bryan says:
      August 28, 2009 at 7:41 pm

      You didn't answer the question. You don't understand, or acknowledge the benefit that unemployment offers.

      You continue to look at the smaller picture, rather than the big picture.

    • Bryan says:
      August 29, 2009 at 4:05 am

      Toyota is not pulling out of Calif due to unemployment benefits.

      • sangell3 says:
        August 29, 2009 at 10:04 am

        Bryan, unemployment benefits are financed by a fund that is collected from current payrolls. California has burned through its fund and that is why it is now forced to borrow from the Federal government to continue paying out benefits.

        When you have zero dollars in an insurance fund you have to raise money. That means you have to increase the tax, fee, revenue enhancement, call it what you will, on employers. Toyota won't have to pay this if it moves its production to Texas or Ontario which is what it is doing. If you go to today's LA Times and read their story on NUMMI you will see this telling quote...

        "an executive from the Fremont plant had expressed concern to lawmakers about the state's workers' compensation system, overtime laws and employee leave requirements..." He could have well added " and this state's bankrupt unemployment fund which will not only have to be replenished but raise money to pay for benefits already paid out but not funded."

  • Bryan says:
    August 28, 2009 at 7:42 pm

    I still wait for someone to explain how I am wrong!

    Anyone else?

    • Bryan says:
      August 29, 2009 at 4:02 am

      Nobody will explain how I am wrong. Because I'm NOT wrong. The righties have no answer for my questions!

  • Bryan says:
    August 29, 2009 at 4:06 am

    Okay people, I put my ass on the line here.....tell me how I am wrong...I'm waiting!!!

  • joe says:
    August 29, 2009 at 5:04 am

    The up rate is actually over 16%, govt can bail out GM etc, but not the 7th largest economy in the world, as CA goes so will the US.

    Another stellar job by our Govt.

  • dean says:
    August 29, 2009 at 9:43 am

    I have a brother who has been on unemployment for well over a year. He wont even look for a job, content to live on the dole. It really disgusts me to be honest. I even offered him a job, which at the time I thought would be temporary. He turned me down saying "he did not want to mess up his unemployment bennies". I hired a friend, and the job turned permanent. His loss. I can only imagine there are plenty others out there milking the system just like this. Get off you lazy rears and "GET TO WORK!!"

  • TheAllKnowing says:
    August 29, 2009 at 10:15 am

    Bryan sounds like he needs to get a job.

  • AG says:
    August 29, 2009 at 11:45 am

    Bryan says:
    Do you realize where unemployment benefits come from?

    Yes I do. In fact it's in the same article we are commenting on

    "Meanwhile, the state's unemployment insurance trust fund ran out of money in January. The state is only responsible for picking up the first 26 weeks in benefits. It is borrowing from the federal government to make those payments."

  • Lee says:
    August 30, 2009 at 3:43 pm

    TO: StivBators and others. Perhaps it is not directly Obama’s job to create private sector jobs, but it is certainly not his job to destroy them by over-burdening business with taxes and inflation (trillions of dollars in deficits). If you haven’t noticed, business in America is not doing well financially. Yes, they exported lots of jobs overseas, because we Americans asked them to. We choose what we buy and how much we are willing to pay. American business did/do what they had/have to do to survive and prosper, the best they can. Anyone that has even a basis understanding of how the free enterprise system works understands this.

    For example. Who put the American shoe manufacturers out of business? American consumers, pure and simple. Do I need to name the brands that you have on your feet? Different example, Obama just completed his wonderfully successful “cash for clunkers” program. Of the top 20 cars sold, only two were made by American companies. Why did Obama create all those jobs overseas?

    Bator, it goes on and on. I am not picking on you in a mean spirited way, I do see your point of view but we have to think together for answers. We have to do what we can do individually. Let’s look at where things are made. Let’s get the information out about what is made in America especially by American companies.

    Private sector job creators are the ones that will save us. Everyone can’t live on a Government check. We can start with our car companies – GM, Ford and Chrysler. American business is not the golden goose to be killed. We want them alive, prosperous and growing. Let’s give them reasons to expand and start re-hiring Americans. This is the change I can believe in, not more of the same of spending money that we don’t have.

    Be-little and drive away the entrepreneurs in America at your own risk. This is becoming a world economy and more of the American risk-takers with money will take it all overseas.

    Don’t you do what is in your own best interest? Are you greedy to take a higher paying job?

    Whether we like it or not, Achievers/ Risk takers (People with money) have choices that we do not have. Private sector job creators are the good guys. We need to make them welcome here in America and show our appreciation for the jobs they create here by buying American. We can force them to bring the jobs home just as we forced them to take them overseas.

    Perhaps we should force Americans to buy American by over-taxing foreign made goods. But at this point in history, I have my doubts that they would take it and keep financing our trillions of dollars in deficits. It is easy to be a liberal, just spend someone else’s money to buy more votes. Of course, the other guy should be willing to pay for my passions? Right?

    As to what we owe illegals and anchor baby families, living here; now that is a book by itself. As to universal health care, Obama says, “of course, if they are HERE we will treat them; no one will be turned away”. Yea, lets make them comfortable so they stay longer.

    I am in banking and I found out the other day that the 2nd largest source of income for most of the countries south of us and many in Asia and Africa is money sent home from their citizens working overseas. Amazing, only the “bleeding heart” Americans would shoot themselves and their children in the head. When illegals are rounded up, the 6 o’clock news focuses on the disaster it causes the illegal’s families. And not a word in their ranting about the effect on the 10-18% unemployment rate of Americans. Amazing.

    Last item. I read that as a California tax payer that the money I made between 1/1/09 to 8/23/09 went 100% to the cost of government (including deficiets) (Federal, State and Local). I tell you when that date gets to December the 1st; I am quitting work. Please understand that even little people like me have choices and if the government assistance is large enough many more everyday will find a way to get by on that. Given time, people will tend to do what is in their own best interest. No one likes being screwed out of their money.

  • Lee says:
    August 30, 2009 at 6:34 pm

    TO: Bryan. Of course people that receive unemployment spend that money. Of course they pay sales taxes on some of their purchases. Duh. Of course it is better for them if they have money. But, as to lots of people being on unemployment being a good thing, I respectfully disagree. The root of this is quite disturbing on many levels. .

    Bryan, this is all happening on borrowed money. That is a bigger issue here.

    These people are living on the government’s credit card.

    The employers of California are going to have to pay all that money back via very high rates for many, many years. And we are talking about 100s of percents increases over what they are paying now and what other states charge. Therefore, if they stay then they must pass these costs on in higher prices to you and I for their products and services. Everything must come from the product or service buyer.

    Of course, any company that leaves California knows this and considered whether or not they want to pay that bill. People that run successful businesses are very savey on financial matters.

    California is already an expensive place to operate a business with the high compensation they have to pay because of the high cost of housing, taxes, etc. Businesses know there is a limit to the load they can carry and survive.

    Let’s put it another way. Let’s say they raised your rent by 50% but you could move and live in another place almost as nice for 50% of what you are currently paying. What would you do? Some people would just move, not all, but a fair percent.

    My point is this decision is even easier for a business. It is their survival, their life is at stake. They have to move whether they want to or not. If they can’t stay competitive then you and I put them out of business.

    Bryan, that is the point of this article. What it means for the future of business and jobs in California. What would you do, if you could move your business and make millions or keep it here and just barely survive while your remaining years waste away till you die? Oh, and of course, with your millions you could buy a nice second home on the beach here to live in when you take early retirement in a few years.

  • Japan says:
    September 3, 2009 at 8:43 am

    Thank you wery much :)

    Keep buying import vehicles like Honda and Toyota. We will keep lossing good paying jobs in the US. These vehicles are not any better then vehicles from US owned companys. However you buying them is killing this country.

    When you lose your home here in the US, move into and live out of your Honda or Toyota. When your kid has to work in China, go live there with them and support that country.

    Take a little pride in your country, think about it.