Catherwood LibraryILR School

Still struggling with soaring unemployment as the aftereffects of the September 11, 2001 terrorist attacks and the economic downturn they contributed to, the New York State Department of Labor has announced that the state may once again need to make use of automatic federal loans to keep its emptied unemployment insurance fund operating. Although the loans would ensure that the state is able to continue paying unemployment benefits to the 6.3 percent of the workforce that is unemployed statewide---8.4 percent in New York City (see WIT for Jan. 24, 2003)---they would trigger mandated unemployment tax increases on in-state employers already facing a fourteen percent average increase this year, if not repaid by November 2004. Making matters worse, the $418 million federal loan the state received when its unemployment fund ran out last month, activated requirements that the state pay 6.3 percent interest not only on that loan, but also on the $231 million in unemployment fund loans it received earlier last year, and the $760 million in loans that it has announced it may now need.