Unemployed Coloradans losing benefits fast, face foreclosures, jail time

Coloradans are suffering directly because lawmakers in Washington can not find a way to work together to pass vital federal unemployment insurance benefits extensions. Like many states, Colorado tied benefits to federal payments and in Colorado the federal money pays larger percentages of claims. As Republicans and Democrats face off on Capitol Hill, thousands of Coloradans are being dropped from the rolls. Some of them will be hungry. Others homeless. And some of them jailed for not paying debts. Kelly, for example, a former Westminster financial analyst whose unemployment insurance recently ended and who didn’t want the Colorado Independent to post her full name, is working to avoid arrest for not paying fees incurred in the wake of a misdemeanor traffic violation.

Bill Thoennes, spokesperson for the Colorado Department of Labor and Employment, said that Kelly’s case is by no means unique and that cases like hers will multiply in the weeks ahead, especially if Congress fails to act.

“As it stands now, each month there are about 10,000 Colorado claimants who will be reaching the end of their allowable weeks of payments over the next few months,” Thoennes said, explaining that there are three tiers of people receiving unemployment insurance payments in Colorado as elsewhere across the nation and that they will come off those payments in waves.

“From the data I have, it looks like about 3,500 claimants now on Tier I will be exhausting those benefits over the next few months. About 2,500 claimants are currently receiving Tier II and will not be allowed to move to Tier III. And about 4,100 claimants now on Tier III will reach the end of their benefits in the next few months.”

Thoennes said that any claimant who was on state-extended benefits lost those payments as June 5 because Congress allowed federal unemployment insurance provisions to lapse June 4. As the National Employment Law Project reports, a month later, lawmakers locked in a posturing and myopic election-year battle over deficit spending, have failed to reauthorized the insurance extensions, even though millions are relying on them because the job market is at historic lows.

Despite the way it is being framed, particularly by Republican deficit hawks, this is not a battle about economic policy, according to the Law Project report (pdf) released today.

Never before has Congress cut off benefits when unemployment was so high. Since the 1950s, federal unemployment insurance extensions remained in place during recessionary periods until unemployment dropped to as low as 5.0 percent. The highest unemployment rate at which these extensions were allowed to expire was 7.2 percent, following the 1983 recession— substantially lower than our current rate of 9.7 percent

Businesses of all sizes are not hiring because they do not see sufficient demand for their goods and services. The Federal Reserve is doing its bit, maintaining the federal funds rate—the interest rate at which banks can borrow from the Fed—at near zero for a year and a half, but there is no more room for monetary policy to boost the economy. That leaves fiscal policy—including especially unemployment benefits—as the primary tool government has to increase the demand for goods and services. Alas, enough members of Congress don’t get it.

From his view in the trenches in Colorado, Thoennes agreed. He said the loss of unemployment is causing problems in numerous areas– in the housing market where foreclosures will continue and in bill collections.

“It is something that our agency is very concerned about,” he said, adding that many Coloradans are at the “end of their rope” and have been looking for jobs for two years.

Thoennes agreed with Kelly’s contention that putting her in jail would be a poor use of state revenue. It wouldn’t pay for job retraining nor would it end in her paying her debt to the Adams County court.

“There ought to be a solution or a way around this, when you see good people who are not shirking their responsibilities but are just simply up against the wall and don’t have the money to pay,” he said. “[Kelly] is not even arguing that the she received traffic ticket unjustly. She would certainly pay it if she had the ability to do so. this is the kind of thing that seems to be rearing its head after 75 years… since the Great Depression, when families where unable to do just the simplest things.”

Kelly told the Colorado Independent that her unemployment benefits ran out in April and, despite actively working to find a new job and signing up with the Colorado Workforce Development program to learn new skills, a series of health complications have left her penniless. She has yet to be able to find a source of income to pay the fines to avoid the jail time she says is looming.

Kelly said she plead guilty in August to not having auto insurance at the time she had the car accident that resulted in the traffic ticket. She incurred $570 in fines and court costs. She set up a payment plan but then the other party in the accident filed a restitution claim of $1500, which she was unable to pay. The Adam’s county collections clerk told her the county would be issuing a warrant for her arrest June 30.

Lorna Hein, collections supervisor for Adam’s county courts said it’s up to cthe collection’s personnel to alter penalty charges.

“We have had some conversations with her and told her what she needed to do… At this point we have not issued a warrant.” Hein said Kelly received an extension up to June 11 but was now delinquent.

Kelly told the Colorado Independent that Lawyers at the Department of Labor and Employment told her that many cities were unwilling to decrease payments partly due to strained municipal budgets. She said Jefferson County chose to waive fines for her in a similar situation.

“All we can ultimately do at this point is try to connect people like Kelly with any kind of resource that we know about that might be of assistance to her,” said Thoennes. “I don’t know that we would be able to intervene with the Adam’s county court, or [if we could] simply send a letter saying we request that the traffic violation be seen as something she will pay when she can [because] she has been unemployed for X amount of weeks. But that’s the kind thing she has been trying to say.”

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Joseph Boven

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