Unemployment Claims Soaring Which Could Lead to More Bankruptcies
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Number of Unemployment Claims Soaring

The number of people currently filing claims to receive unemployment benefits in the United States reached the highest level in five years last week. The Associated Press reported that this noticeable increase is largely due to a new government outreach program to locate people that may be eligible to receive benefits.

According to a report from the Labor Department, the number of unemployed people that have filed applications for unemployment benefits recently reached 448,000.

This was an increase of 44,000 more unemployment claims than the previous week. Economists had predicted a decline of 8,000 unemployment benefit applications for this time period.

The jump in unemployment claims can be attributed in part to new legislation that was passed by Congress in June.

An outreach program was created to notify people who are currently unemployed that this legislation could make them eligible to receive up to 13 additional weeks of unemployment benefits.

Another bit of good news for people who have become unemployed through mass layoffs and other cutbacks is that some may be eligible for another full round of unemployment benefits.

Unemployment claims officials have found that many people who lost their jobs and exhausted their unemployment benefits but then found work for a brief period of time before becoming unemployed again could start over with new unemployment claims.

The recent increase in the number of unemployment claims marked the largest one-week increase since the week of September 10, 2005.

In 2005, the Gulf Coast hurricane disasters spawned a wave of mass layoffs that caused unemployment claims to increase by 94,000 in one week.

While the current unemployment situation is not due to a natural disaster, the state of the housing market and national economy could also be considered disasters.

There have been mass layoffs in housing and construction industries due to the subprime mortgage and foreclosure crisis, and the sharp rise in gas prices has resulted in heavy layoffs in the auto manufacturing industry as well.

Government Workers Also Feel the Sting of Unemployment

Citing a looming cash crisis in California, Governor Arnold Schwarzenegger signed an order on July 31 that eliminated more than 10,000 part-time and seasonal state jobs and could temporarily cut the pay for 200,000 other state workers.

Schwarzenegger ordered his administration to lay off the workers and reduce the pay of most full-time government workers. He apologized to the state employees and acknowledged that many may already be struggling financially due to the poor economy. However, state lawmakers have not approved a budget and without a budget, the governor said that the layoffs and pay reductions were essential.

Almost 200,000 people who work for the state of California are faced with having their wages reduced to the federal minimum wage of $6.55 per hour, with the promise of full salary reimbursements after a budget is in place. Schwarzenegger also ordered a hiring freeze and limited overtime for employees.

The governor signed the executive order at a news conference in Sacramento, California and spoke afterward. He said that his decision was a horrible one to have to make, but that it was the only thing that could be done under the circumstances.

The Los Angeles Times reported that during his speech, Schwarzenegger highlighted the fact that it is his job to ensure that the state of California can pay its bills.

Unfortunately for state employees, it is not his job to make sure that they are able to pay theirs.

If you're facing unemployment and having trouble paying the bills, filing bankruptcy may be an option for you.

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