The U.S. Labor Department is dangling a $3.5 billion carrot in front of state governments to get them to expand the numbers and categories of workers eligible for unemployment benefits.

Hilda Solis, President Obama’s new secretary of labor, wants the states to include part-time workers, public workers and other jobless workers who are not now eligible for these benefits.

Solis discussed her plans in a May 14 talk to hundreds of delegates at the American Federation of State, County and Municipal Employees legislative conference in Washington.

Minnesota is the first state to get some of the extra federal funds in exchange for having passed legislation that expands eligibility for unemployment insurance.

The “carrot” the Labor Department is using is money that was included for that purpose in the president’s $787 billion Recovery Act, the so-called stimulus package.

“I’ve changed the rules on releasing $3.5 billion to provide additional assistance to the states to expand job training for the unemployed and to work with states that widen their unemployment insurance programs — particularly to part-time workers, to workers who move around within a state and to public workers,” Solis declared.

Not all states are as quick as Minnesota to grab the extra benefits, however.

Some states are resisting taking the carrot because businesses are lobbying hard against more aid for the unemployed.

Profit-hungry corporations are arguing that the expanded unemployment benefits might become permanent after the stimulus money runs out, forcing them to pay more into the unemployment insurance trust fund.

Republican-controlled state legislative bodies in South Carolina and Virginia have already turned down the extra funds because of pressure from the business lobbies.

Solis also said that the long-term solution to helping the unemployed is to create more jobs.

She noted that $88 billion has already been set aside for 3,000 “shovel-ready” construction projects in 50 states and the District of Columbia and Puerto Rico.

Solis said that, only a week earlier, the administration had released $101 million in additional funds for unemployment benefits and retraining assistance for workers who lost their jobs due to competition from imports.

The stimulus law extended that program, called Trade Adjustment Assistance. As of May 18, eligibility for Trade Adjustment Assistance now includes not just factory workers who lose their jobs to imports, but also workers whose jobs depended on selling goods and services to now laid-off factory workers.

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