Californians May Lose Federal Jobless Aid as Rate Falls

California’s jobless rate declined to a four-year low of 8.5 percent last month, triggering an end to benefits for more than 100,000 people still out of work, according to the state employment agency.

Under U.S. Labor Department rules, residents are no longer eligible for the final 10 weeks of extended federal unemployment benefits known as tier 4, because the state jobless rate has fallen below a moving three-month average of 9 percent, the California Employment Development Department said yesterday.

California, among the hardest-hit states in the 18-month recession that ended in June 2009, has crawled its way back and seen its jobless rate fall from a record 12.4 percent in October 2010. A year ago, the state remained mired in a slump and matched Rhode Island for the nation’s second-highest jobless rate, trailing only Nevada. With the June figures, the Golden State inched closer to the U.S. 7.6 percent average.

The state labor agency warned that it expects to be notified today that more than 100,000 Californians currently receiving extended benefits will face a cutoff, unless they can qualify for the final 10 weeks of aid before Aug. 11. More unemployed workers may also be affected later, the agency said.

Those who are already collecting and remain eligible can receive aid until Dec. 28 or until it runs out, whichever comes first, the agency said.

Biggest Gains

California posted the largest nonfarm payroll gain of any state, adding 30,200 jobs last month, Labor Department figures show. The state’s jobless rate fell from 8.6 percent in May and 9 percent in April. Led by a revival of the housing market and construction, California has added more than 250,000 such jobs in the past year to reach about 14.6 million, the agency said.

The state said more aid cutbacks are on the horizon. All extensions to the basic 26 weeks of state unemployment benefits are set to run out at the end of this year unless Congress votes to renew them.

Basic benefits plus all state and federal extensions have let jobless workers receive aid for as long as 99 weeks during the recession and its aftermath. Benefits were trimmed earlier this year, when Congress allowed automatic spending cuts to kick in under a process known as budget sequestration.

More than 750,000 Californians are collecting unemployment checks, with almost half on federal extensions, the state agency said. The agency paid out $13.8 billion in benefits last year and $5.8 billion in 2013 through June.

Before it's here, it's on the Bloomberg Terminal.