About 45,000 Massachusetts residents who have been unemployed for at least six months will see their unemployment benefits shrink by the end of the month due to automatic federal cutbacks that went into effect recently because of a stalemate in Congress.
Massachusetts officials said they are mailing letters Saturday to alert these workers that their benefits will drop about 13 percent, or $50 a week on average, as a result of across-the-board cuts known as sequestration. Nationwide, about 2 million long-term unemployed are affected.
The reductions go into effect in Massachusetts the last week of this month. And that only adds to the worries of people like 54-year-old Harriette Batson of Chelsea, a commercial loan analyst who was laid off in October from her job of 12 years at a major bank.
Her weekly unemployment check would drop to $458 from $526, leaving her with about $300 less at the end of each month. She said she would have to fill that gap by cutting back on necessities, including food.
“People might not think that’s a lot of money, but in fact it is, especially in this economy with rising food prices, transportation costs, and my health care payments,” said Batson, a single mother. “It really affects you.”
The cuts will not affect those receiving benefits during the first six months of their unemployment because those are paid through a state trust fund financed by employers. But the benefits after six months are funded by the federal government, making them subject to the $85 billion in cuts to military and domestic spending. Those cuts went into effect last month.
In Massachusetts, unemployed workers can collect up to 28 additional weeks of federally funded benefits after they exhaust state benefits.
The cuts come as long-term unemployment in the state and nation remains at near-record levels.
Nearly 65,000 unemployed people in Massachusetts and 3.5 million nationally have been looking for work for a year or more, nearly five times the number in 2006, according to the Executive Office of Labor and Workforce Development and US Labor Department. About half of those affected are age 45 and older, a segment of the workforce with vast experience that is finding little opportunity.
“You are penalizing people who are already beaten down, taking more money away from the very short money that they have,” said Joan Cirillo, executive director of Operation ABLE, a Boston nonprofit that offers job placement and retraining assistance specifically to older workers. “It’s just one more punch to someone struggling.”
The Labor Department required states to scale back federal benefits as part of sequestration, but gave them leeway over how to enact the cuts. In New Jersey, for example, benefit payments to the unemployed will begin shrinking this week, while in Connecticut, officials said they will put off the cuts until June.
That delay, however, will probably mean bigger reductions in unemployment checks.
Massachusetts is among the 14 states that plan to make the reductions in April.
Mary Lou Ward of Medford, who lost her job as a manager at WGBH eight months ago, said her unemployment check helps her family pay the mortgage.
After taxes, Ward said she receives about $240 a week in benefits, an amount likely to drop by about $25 a week. If Ward cannot find a job and has to collect the full 28 weeks of federal benefits, she will receive about $700 less in benefits due to sequestration.
That is an added stress during an already anxiety-provoking job hunt, the 64-year-old said. She has not only tried to find jobs in television, but is drawing on her earlier experience working at a hospital in an effort to land a job as a patient advocate.
“We’re going to be pinching pennies,” Ward said. “There are things we’d like to do for our daughter, but we’ll have to cut back.”
This week, President Obama proposed a budget that would end the automatic budget cuts, but includes controversial cost-saving changes to Social Security and Medicare programs. The House and Senate each passed different proposals, which would require what has rarely happened in Washington lately: compromise.
The differences are unlikely to be resolved in time to help people like Batson, the unemployed loan analyst from Chelsea. Batson, who said she had always held a job since she was a teen, is trying her best to stay upbeat about her job search, but worried about how she will handle a cut in benefits.