Unemployment leaps over 20 percent in 25 New York counties

NEW YORK (Reuters) - The ranks of unemployed workers soared more than 20 percent in 25 New York counties in the first half of 2008, even in wealthy suburbs around New York City such as Westchester and Nassau, a report said Thursday.

Some half a million New Yorkers were unemployed by mid-year, the highest number since 2004. More job losses are likely as a national economic downturn is intensified by the problems Wall Street firms are struggling with, according to the Fiscal Policy Institute's study.

"At a minimum, it appears that the state's economy will continue declining through the rest of 2008 and possibly into 2009," according to the study by the Albany-based think tank.

New York's economy is dependent on the fortunes of the Wall Street finance industry, so the state's tax collections have plunged with the profit-drought now withering banks and brokerages. Democratic Gov David Paterson recently persuaded the legislature to cut $427 million of spending and prune the three-year deficit by $2 billion to $24.4 billion.

But those budget cuts could cause more job losses, which in turn could make it harder for New York to replenish its unemployment insurance fund.

New York's fund ranks 49th among all states by some measures, the study said, noting the taxable wage base used to calculate contributions, $8,500, is about $3,000 lower than the U.S. average and has not been increased since 1999.

"As New York's policy makers address the large budget gaps, it is imperative that budget actions not worsen the economy and exacerbate the unemployment crisis," the report said.

Though Hispanic and African American workers make up 29 percent of the work force, their jobless rates are "roughly double" those of their white counterparts, the study said.

Other problems the study cited included New York's decision to leave the top weekly unemployment benefit at $405 since 2000, and the lack of a strong recovery from last decline that grew worse after the September 11, 2001 air attacks.

When employers began hiring more workers in the middle of 2003, after the 2001-2002 economic slowdown, the gains were fueled by borrowing and the housing bubble, neither of which proved lasting, the study said.

The upswing, which began faltering last year, was the first one on record during which "the real incomes of middle-class families failed to rise above where they were at the peak of previous expansion," the report said.

Another measure also revealed that the state started the current downturn in a weakened state: more than 22 percent of unemployed individuals had been hunting for jobs for more than six months in 2007, versus just a bit over 17 percent in 2000, before the prior decline took hold, the study said.

(Reporting by Joan Gralla;)