--2 New Mexico to drop seven weeks of unemployment benefits
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New Mexico to drop seven weeks of unemployment benefits

A sliding unemployment rate is prompting a phaseout of federal HUP perks

July 5, 2011, 5:00 pm
By Joey Peters
When unemployment rates drop, the benefits often go along with them.

In mid-June, New Mexico's sinking jobless rate prompted a cut of six weeks of federal unemployment benefits known as Tier 4. That was because state's three-month average unemployment rate fell under 8.5 percent, the baseline for Tier 4.

Now the state is gearing up for more cuts. On July 9, it will lose an additional seven weeks, cutting unemployment eligibility from a current 93 weeks to 86 weeks.

The seven weeks fall under federal High Unemployment Rate Period extended benefits, which will be phased out because New Mexico's unemployment average for the past three months fell below 8 percent.

While a drop in unemployment is clearly good on paper, some dispute the numbers, which are based off of U.S. Bureau of Labor statistics, a statewide survey and timed economic models.

The state's Workforce Solutions Department reported May's jobless rate at 6.9 percent.

"We believe it's wrong," Jeff Mitchell, an economist with the Bureau of Business and Economic Research at the University of New Mexico, recently told SFR.

Mitchell says that state's smaller population gives it a greater margin of error. He also says the numbers show the state's labor force is shrinking faster than it should, suggesting a drop in the labor force from disillusioned job seekers.

Mitchell also disputes a recent Workforce Solutions report that ranked New Mexico's nonfarm job growth last in the nation.

For its part, Workforce Solutions says its numbers are as accurate and up-to-date as possible. It plans to release the state's June unemployment rates July 28.

HUP and Tier 4 are part of 20 additional weeks of benefits granted by the federal government during hard times. The remaining six weeks are subject to cuts if the state's average jobless rate over three months drops to 6.5 percent or lower.

Photo courtesy of marketmixup.com


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