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Gov. Malloy: Sequestration Budget Cuts Require States to Reduce Federal Unemployment Benefits

Press Release

Location: Hartford, CT

Governor Dannel P. Malloy today expressed concern over federal sequestration cuts that will adversely impact more than 30,000 claimants in the state who are collecting federal unemployment insurance benefits and will see a decrease in their benefits beginning next month. Additionally, federal sequestration cuts will force CTWorks Career Centers to decrease employment services available to job seekers.

"We are seeing a steady rate of job growth in the private sector and recovering jobs lost during the national recession, however for those who are still seeking employment, we must ensure that these services continue to be there," Governor Malloy said. "Economists have estimated that every dollar in unemployment benefits generates $2 in economic activity. Not only will these federal cuts have a direct impact on individuals struggling to pay the bills while seeking new employment, but the cuts will also be felt in our overall state economy."

Beginning with payments received the last week of June and extending through September, claimants will see their federal Extended Unemployment Compensation (EUC) benefits reduced by 19.2%. In October, when a new federal budget is in place, cuts to federal benefits could change again. The mandatory federal cut does not apply to state unemployment insurance benefits.

In Connecticut, the average weekly benefit amount is $330, and those claimants would see their benefit decrease to approximately $265. This mandatory reduction will represent a loss of nearly $1.9 million each week in Connecticut.

"This is heartbreaking news for unemployed residents who are struggling to find a new job during the recovery and rely on weekly benefit payments to purchase food, pay the rent, or keep the lights on," noted State Labor Commissioner Sharon M. Palmer.

In addition to cuts to federal unemployment insurance benefits, funds to provide employment services at the state's local CTWorks Career Centers will be cut by more than $2 million and employer services offered by the agency's CONN-OSHA division will be impacted by a $150,000 budget decrease.

A letter sent by USDOL Acting Secretary of Labor Seth D. Harris noted the reduction to federal benefits is part of the $85 billion in federal spending cuts mandated as a result of sequestration. Nationwide, cuts to federal EUC benefits will amount to $2.3 billion, with 3.8 million people receiving Emergency Unemployment Compensation experiencing a decrease in their weekly benefit amount.

According to the letter, services provided by the state's Department of Labor affected by sequestration also include:

-Federal funds to provide employment services at the CTWorks Career Centers will be cut by $470,000.

-Funds for services provided under the federal Workforce Investment Act for adult, youth and dislocated worker employment and training programs will be cut by $1.6 million.

-CONN-OSHA's budget for employer consultations, the occupational safety and health program, and data collection efforts will be cut by $150,000.

-The Office of Research Unit budget for data collection and analysis will be cut by 2.5 percent and several statistical initiatives will be eliminated.

-Federal Wage and Hour staffing levels will be cut, which will reduce the number of federal worksite and wage investigations that can be performed.

The Connecticut Department of Labor will be sending letters to all affected EUC claimants to notify them of their reduced weekly benefit amount and the number of weeks they have remaining on the EUC program.

Commissioner Palmer urged individuals seeking employment to take advantage of the free services for jobseekers offered through the statewide CTWorks system. Individuals can also learn about the variety of community services that may be available by calling United Way's Infoline at 2-1-1.

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