Thousands to lose long-term unemployment benefits, even where it remains sky-high

Johnny Shamoun plays basketball with his kids in Merced, Calif. He's been unemployed for 18 months, and will have his benefits cut soon.

(CBS News) MERCED, Calif. - A lot of Americans are still suffering from the investment disasters of 2008. Back then, Congress extended unemployment benefits to 99 weeks in many states -- but tomorrow, that extension ends and 236,000 Americans are about to get notices that the checks are over, as CBS News correspondent John Blackstone reports.

At the Community Action Agency in Merced, Brenda Callahan-Johnson is bracing for a flood of long-term unemployed seeking emergency food, housing and financial aid.

"A lot of these people are not going to know that they are not getting unemployment until they get the letter in the mail, and they're going to be scared," Callahan-Johnson told CBS News.

Tomorrow 93,000 Californians are losing extended unemployment benefits.

Callahan-Johnson told CBS News correspondent John Blackstone that she had never seen anything like this.

"In 19 years, I have never had this many cuts in unemployment at the same time," she explained.

In California's agricultural heartland, Merced is being hit hard by federal law that cuts extended benefits in states where unemployment has fallen. In the last year, California's rate has dropped from 11.9 percent to 11 percent. But, in Merced, it's 20 percent.

"Merced County is experiencing dire unemployment," Callahan-Johnson said.

While finding work in Merced is difficult, finding places where people used to work is easy. One plant, which made ladders, closed in October -- taking with it 140 jobs.

The closed Pepsi bottling factory once employed 40. Sixty people used to make parts for Toyota at another closed location.

Johnny Shamoun has been looking for work for 18 months.

"You got some people even calling it Mer-dead," Shamoun said, adding that it could be a depressing place to live.

He was laid off as a counselor in a county youth program, and has been collecting unemployment insurance for 75 weeks. He thought he could go to 99. Blackstone asked him how he felt about forecoming letter that would tell him he would no longer have unemployment benefits.

"Even just you saying that, I can feel it. I can feel it right here," he said.

The father of four had been collecting almost $300 a week. Now, he's turning to the Community Action Agency, but it too is running out of resources.

"We have one program that we can assist more people in," Callahan-Johnson explained. "Otherwise, we are over 100 percent served."

Forecasters say Merced County should begin seeing modest job growth as California's economy continues to improve. That provides a bit of hope in a place where the safety net is quickly filling with holes.

  • John Blackstone

    From his base in San Francisco, CBS News correspondent John Blackstone covers breaking stories throughout the West. That often means he is on the scene of wildfires, earthquakes, floods, hurricanes and rumbling volcanoes. He also reports on the high-tech industry in Silicon Valley and on social and economic trends that frequently begin in the West.