Jobless rate takes big climb

SACRAMENTO — California's unemployment rate jumped to 8.2 percent in October, the highest rate in 14 years, just as a state fund that pays unemployment benefits was about to run out of money, the Employment Development Department said Friday.

State officials are preparing to ask the federal government to step in with a loan on Dec. 1 so they can continue paying jobless benefits to California's now more than 1.5 million unemployed, nearly a third of whom have lost their jobs in the last year.

Yuba County's jobless rate was 12.9 percent, second highest in the state. Sutter County's rate was 12.2 percent, third highest. Colusa County' 11.8 percent jobless rate was sixth highest.

Yuba-Sutter's jobless rate climbed to 12.5 percent in October, above the 8.5 percent rate in October 2007.

October's rate was the highest in Yuba-Sutter for that month since 1995.

State estimates show 8,800 people were out of work last month in the two counties.

A separate survey indicated that Yuba-Sutter lost jobs over the year in construction; manufacturing; retail; trade, transportation, warehousing and utilities; and state and local government.

Professional and business services, and educational and health services gained positions.

The statewide rate was up from 7.7 percent in September, and from 5.7 percent in October 2007.

The largest hit came in the construction industry, which has lost 65,900 jobs in the last year, mostly in new-home building. About 31,500 manufacturing jobs were lost in that time and 31,800 in the financial sector, including banking and mortgage industry jobs, according to EDD.

The department said its monthly survey found 527,918 people were receiving regular unemployment checks in October.

But the fund from which California makes those payments is on the brink of insolvency.

The state's unemployment insurance fund is expected to have a deficit of $2.4 billion at the end of 2009, forcing it to borrow from the federal government for only the second time since the program was established in the 1930s.

If no steps are taken to increase the fund's revenue or reduce its payouts, its deficit is projected to hit $4.9 billion by the end of 2010.

Gov. Arnold Schwarzenegger has proposed raising the taxes that employers pay into the fund by $56 to $427 per employee, as well as reducing benefit levels from the current wage replacement rate of 50 percent to 45 percent and raising income eligibility requirements.

The governor used Friday's news to remind the state Legislature that urgent action is needed.

"We've known for years that changes must be made to the fund to keep it solvent, and it is unfortunate that now, when we need it most, it is racing toward the red," he said in a statement Friday.