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Extra jobless aid is cut in Mass.

Thousands to lose US benefits as economy picks up

By Kaivan Mangouri
Globe Correspondent / June 21, 2011

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Thousands of Massachusetts residents will lose jobless benefits beginning next month as the state’s steadily declining unemployment rate disqualifies it for the extra federal assistance provided earlier in the recession.

Unemployed workers will lose seven weeks of benefits under the rules of a federal program that extends eligibility based on state unemployment rates. Residents in states with rates above 8 percent are eligible to collect 20 weeks of additional benefits under this program; once the three-month average is below 8 percent, residents are eligible for 13 weeks.

The Labor Department notified the state late Friday that its average unemployment rate had fallen below the 8 percent threshold and eligibility for extended benefits will be shortened by seven weeks. An estimated 20,000 residents already in this program could be cut off from benefits sooner than expected; the first of them, about 6,500, will reach the new limit in July and exhaust their benefits.

The Massachusetts unemployment rate fell to 7.6 percent in May, bringing the three-month average to 7.8 percent, down nearly a percentage point from a year ago.

“The recovery is not as robust as we would like, but since December 2009 we’ve been growing — the Massachusetts economy is getting back jobs,’’ said Judith L. Cicatiello, the state’s director of unemployment assistance.

This federal assistance, known as extended benefits, is the unemployment program of last resort. It becomes available in Massachusetts after jobless workers exhaust 26 weeks of state unemployment benefits and up to 47 weeks of emergency benefits authorized by Congress during the worst of the recent recession.

Both these extension programs will expire at the beginning of next year unless Congress reauthorizes them.

Despite the state’s improving economy, jobless workers — particularly those losing benefits — still face a tough labor market. The Massachusetts unemployment rate has declined in each of the past four months, but it remains historically high.

In the technology-led recession that began in 2001, for example, the state unemployment rate peaked at 6 percent.

Michael Goodman, an economic analyst at the University of Massachusetts Dartmouth, said the improvement in the statewide average hides an uneven recovery that has concentrated its benefits in technology and research-oriented industries that tend to be centered around Greater Boston. Jobs are particularly hard to find in blue collar occupations such as construction and manufacturing, and in regions beyond the Interstate 495 belt.

For example, the April jobless rate in the Boston metropolitan area was 6.5 percent, compared to 8.5 percent in the Springfield metro area and 10.7 percent in the New Bedford region, according to state unemployment statistics.

“It’s certainly a hardship for the families and households that will no longer be eligible’’ for jobless benefits, Goodman said. “The unemployment rate is reflective of improvement overall, however, jobs in left-behind industries are masked by the innovation economy.’’

The federal government typically ties unemployment relief programs to economic conditions. During the worst of the recession, for example, Massachusetts residents could collect up to a total of 99 weeks of unemployment between regular, emergency, and extended benefit programs.

Last fall, when the state unemployment rate dropped below 8.5 percent, that was reduced to 93 weeks. With the latest decline in the rate, the potential maximum will be 86 weeks.

There are signs of improvement in the economy. Many staffing and recruiting firms say that demand for workers is increasing among employers.

Kip Hollister, chief executive of the Boston-based staffing firm Hollister Inc., said her company is seeing particular demand for workers in technology, creative services, sales, and administration.

Skilled candidates are getting placed in about a week, compared to three or four weeks a year ago. And companies aren’t just replacing people or bringing in temps, she said, they’re adding new positions.

“Our candidates are getting multiple offers, they’re getting counteroffers,’’ she said, “and this we have not experienced since well before this past recession.’’

Globe reporter Katie Johnston Chase contributed to this report. Kaivan Mangouri can be reached at kmangouri@globe.com.