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Pennsylvania Running Low On Unemployment Benefits

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Dec 15, 2008 6:53 pm US/Eastern

Pennsylvania Running Low On Unemployment Benefits

Reporting
Jon Delano
PITTSBURGH (KDKA) ― "It was a big shock. I really didn't expect it at all."

Michelle Baum is one of 500 employees at UPMC who recently lost a job.
Now she becomes one of the nation's 4.4 million Americans on unemployment benefits.

"It's vitally important. I qualify for a little over $500 a week in unemployment benefits. That will pay for my mortgage," said Baum.

But Pennsylvania's Unemployment Compensation -- or UC -- Fund has burned nearly $3 billion dollars this year, leaving just $1 billion for next year.

"That is roughly about four to six months of benefits," says Troy Thompson, a spokesman for the PA Department of Labor & Industry.

By next April, the state's UC Fund will be broke, leaving the unemployed in the lurch.

"It's really scary," notes Baum.

The UC Fund gets its money from taxes on every employee and employer in the state.

Employees pay 60 cents on every thousand dollars earned into the UC Fund, while employers pay more, from a $1.83 to over $13 on the first $8,000 paid to each employee.

When the fund runs out, the state borrows money -- but that is just a short-term fix.

"Everyone is in agreement that something must be done, and we cannot sit back and let this problem get worse," said Thompson.

"But does that include raising taxes on Pennsylvanians who work?" asked KDKA money editor Jon Delano.

"As I said, at this point, I cannot speculate on that."

When Baum gets back to work, she's willing to pay more UC taxes to help others.

"I think we need to do whatever it takes, and I've always been a believer in community responsibility for the community."

The governor's office says they have a wait-and-see approach to this issue right now.

The last time the UC fund ran out of cash, money was borrowed from the state's motor vehicle fund.

This time, since so many states are affected, the federal government may have to offer loans to help the states.

Call it a bail-out to help average people temporarily out of work. 

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

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