Congress restructures unemployment benefits

NEW YORK (CNNMoney) -- The 99ers? Call them the 73ers.

Beginning later this year, the maximum number of weeks the jobless can collect unemployment benefits will be reduced to 73 weeks.

The legislation, which Congress approved Friday, calls for unemployment insurance to be reduced in two stages. States with lower jobless rates will see federal benefits trimmed starting in June. The full cut will go into effect in September.

Lawmakers also revamped parts of the unemployment insurance system, by allowing drug tests of certain recipients and permitting states to use the funds to subsidize employment. The legislation also creates national job-search requirements for everyone collecting either state or federal benefits.

The jobless have been able to collect up to 99 weeks of benefits since November 2009, as part of the nation's unprecedented response to the Great Recession.

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While long-term unemployment remains a problem, a growing chorus of experts and lawmakers have called for the easing of the safety net as the economy slowly recovers and the federal government looks to rein in spending. Republicans, in particular, had looked to reduce the number of weeks the jobless could collect benefits and tighten eligibility requirements.

The unemployment section of the legislation, which also extended the payroll tax credit, costs $30 billion. Americans have collected a total of $434 billion in unemployment benefits over the past four years, with the federal government footing $185 billion of the tab.

Starting in September, the jobless in states with unemployment rates below 6%, such as North Dakota and Vermont, will get a maximum of 40 weeks of checks. Now they get as much as 60 weeks. Those in the 6% range will get no more than 54 weeks, a reduction of as much as 32 weeks.

Unemployed residents of states around the national average, currently 8.3%, will get a maximum of 63 weeks, which equates to a drop of as much as 36 weeks.

The jobless living in states with unemployment rates above 9% will top out at 73 weeks, down 26 weeks from the current 99-week maximum. These states currently include Florida, California and Nevada.

The change equates to a loss of thousands of dollars for the jobless. In Washington, for instance, where unemployment is just above the national average, a nine-month reduction in checks could total more than $13,650 if the rate is the same in September.

The federal-benefits pullback follows the curtailing of some state benefits last year. At least six states reduced the number of weeks the jobless could receive state benefits from the standard 26.

"The graduated approach will avoid the shocks to the economy and to unemployed workers that there would have been with a sharp cutoff" of federal benefits, said George Wentworth, senior staff attorney at the National Employment Law Project. "It keeps the program functioning as the effective lifeline it needs to be."

The legislation will also allow states to screen applicants for illegal drugs if they lost their job due to a failed or refused drug test, or if they are applying for a position that requires testing.

States will also be able to apply for waivers enabling them to implement reforms, such as using unemployment insurance funds to subsidize employment. Up to 10 states will be allowed to test Georgia Works-type programs, which place the jobless in training positions while they continue to collect weekly checks.

The legislation also mandates the creation of national job-search requirements for all recipients, in order to eliminate the state-by-state approach currently in existence.

States will also receive $1 billion to assist with skills testing for the long-term unemployed, underemployed and self-employed. The U.S. Department of Labor already provides funding to assess the work-readiness of the unemployed, but the legislation makes it a requirement for those who have been jobless for more than 26 weeks.

Republicans trumpeted the fact that these changes made it into the final bill. But President Obama had also called for several of these adjustments in his American Jobs Act proposal last September.