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State Unemployment Funds Going Broke From Flood of Claims

  • California, New York, Texas among states seeking federal loans
  • Over $150 billion of such loans were needed in last recession
Chairs and tables sit inside a closed restaurant in Times Square in New York, U.S., on April 21.

Chairs and tables sit inside a closed restaurant in Times Square in New York, U.S., on April 21.

Photographer: Michael Nagle/Bloomberg
Updated on

The record number of Americans drawing unemployment benefits over the past six weeks is rapidly draining the cash set aside by the biggest U.S. states, leaving them poised to borrow tens of billions of dollars from the federal government.

The strain is likely to grow with more than 30 million workers, or nearly one fifth of the labor force, relying on unemployment checks with vast segments of the economy shut down. The unprecedented scale of the payouts are depleting the state governments’ unemployment trust funds, nearly half of which had less set aside than needed to contend with a recession.