Expiration of jobless benefits sparks debate

The looming expiration of federal unemployment insurance is reigniting a debate that could result in substantial changes to a program that serves as a lifeline to millions of jobless Americans.

The failure of the congressional supercommittee to reach a debt-reduction agreement that would have included an extension of benefits has left people who have been out of work for more than six months in danger of losing their payments. If lawmakers allow the unemployment program to expire on Dec. 31, an estimated 1.8 million people would lose benefits by the end of January.

The magnitude of the problem will come in stark relief Friday when the Labor Department is expected to report that the unemployment situation changed little in November. With long-term unemployment continuing to weigh down the economy, experts say that insurance benefits can be a significant boost because recipients quickly spend the money on day-to-day needs.

Members of Congress are working on a measure to extend the program, and advocates are hopeful that a deal will be reached.

But, they added, given the sharply differing views among members of Congress, nothing is guaranteed.

“The mystery to me is why this isn’t a no-brainer,” said Heidi Shierholz, a labor economist at the liberal-leaning Economic Policy Institute. “It is sort of stunning that this has to be deliberated at this level at a time when we have this high level of unemployment that is projected to last so much longer.”

But with the national unemployment rate hovering near or above 9 percent for the past two and a half years, the extended level of high joblessness is taking an unprecedented toll on both state and federal budgets, lending urgency to calls by some policymakers to trim them.

Congressional leaders are discussing whether to substantially shorten the amount of time people receive unemployment benefits. Currently, jobless workers in 33 states and the District can receive as many as 99 weeks of unemployment benefits, a ceiling that some in Congress would like to see lowered to 79 weeks, according to senior legislative aides.

The federal government pays unemployment benefits for people whose state benefits are exhausted, which is typically after six months. Currently, 42 percent of the nation’s unemployed — nearly 6 million people — fall in that category, though not all of them collect the benefits.

The long-term unemployed have accounted for 40 percent or more of the total jobless for nearly two years. That is the nation’s longest stretch of long-term joblessness since the Labor Department began gathering the statistic in 1948, according to the National Employment Law Project.

The Labor Department says there are four unemployed people for every job opening in the country, signaling that unemployment will remain high for many months to come.

When layoffs began to spike in 2008, Congress extended unemployment benefits by as many as 53 weeks. The following year, lawmakers added an additional 20 weeks, making the overall benefit limit 99 weeks.

But the depth and duration of the ongoing economic downturn coupled with the fiscal squeeze affecting all levels of government has left some policymakers in search of ways to reduce the cost of the safety net for the unemployed.

The number of Americans receiving food stamps alone is up more than 70 percent over the past five years, to a record 45.3 million. Similarly, demand for federally subsidized school lunches and Medicaid have soared with the economic downturn.

In the face of those demands, nine states, including Michigan, Florida and Wisconsin, have moved to reduce the burden of unemployment insurance either by reducing the amount paid to the jobless, the amount of time they can collect benefits, or both.

The White House estimates that a one-year extension of federal unemployment benefits would cost nearly $50 billion. The average recipient of federal benefits receives $296 a week, according to NELP.

“A full year’s extension is what’s needed, both to help the historic number of workers who are long-term unemployed and also to boost the economy,” said Maurice Ensellem, policy co-director of the National Employment Law Project.

Yet, the price tag has some lawmakers worried, particularly in a time of record budget deficits.

“If you want to extend unemployment benefits, they have to be paid for,” Sen. Rand Paul (R-Ky.) told CNN last month. “We have an unemployment program. We have a tax for it. And it’s paid for 26 weeks. So the question is, do we want to borrow money from China to pay people not to work? I think we need to figure out how to get people back to work.”

Beyond looking at shortening the maximum benefit period, members of Congress also are weighing whether to implement some version of the insurance reforms offered by President Obama in September, which he said would be “the most sweeping reforms to the unemployment insurance system in 40 years.”

Obama’s plan includes a provision that would allow the long-term unemployed to continue collecting benefits while they receive on-the-job training from potential employers.

The idea is based on a Georgia program launched in 2003 that aims to teach the jobless new skills by having them work with potential employers for eight weeks.

The proposal has drawn favorable reaction from bipartisan members of Congress, some of whom are sympathetic to arguments that long-lasting unemployment benefits make recipients less eager to find new jobs, while eroding their skills.

But Georgia program, which is voluntary, has had only mixed success. Fewer than three out of four of the program’s 32,000 participants completed the training, and of those that did, only 18 percent found jobs, according to a November analysis by the Georgia Department of Labor.

Staff writer Lori Montgomery contributed to this report.

Michael A. Fletcher is a national economics correspondent, writing about unemployment, state and municipal debt, the evolving job market and the auto industry.
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