The federal government is going to have to loan California to keep unemployment benefits going.
Retailers expect a dismal Christmas season, so they are not hiring many people. That is a big reason the state's jobless rate in October spiked dramatically to 8.2 percent, the highest in 14 years. It was 7.7 percent in September. Just a year ago, 5.7 percent were unemployed.
"We're seeing job losses in retail/trade, manufacturing, like durable goods. So there's definitely evidence out there consumers kind of tightening their belts," said Loree Levy with the California Employment Development Department.
Californians are fighting for elbow room at unemployment offices throughout the state -- whether it is in line, using the phone bank or the computers, all are crowded. Job seekers find their lengthened search frustrating.
"During these times, when it's so hard, you're kind of like, 'OK. I don't know where to go or what to do anymore. Hands up!'" said Anita Gilbert who is unemployed.
With more than 1.5 million people out of work in the state, the sheer numbers are draining California's unemployment fund which cuts $27 million in benefit checks every day. The money is projected to run out sometime in January.
"It is facing insolvency because of actions that were taken by previous administrations, which is to increase the benefits without increasing the funding," said Governor Arnold Schwarzenegger.
The governor proposes increasing employer contributions while also cutting recipient benefits as much as $44 a week. Meanwhile, many economists say we have not hit bottom yet.
"We're looking at another year of job losses and probably rising unemployment. We're just going into what will be a pretty deep recession," said economist Stephen Levy.
Because unemployment is high, California and other troubled states got an additional extension of benefits -- 13 weeks on top of the seven weeks President Georg Bush just approved for the rest of the country. That is being paid with federal money and does not impact our dwindling unemployment fund.
