WITH THE OFFICIAL unemployment rate hitting a new post-Depression high of 9.8 percent, the administration is coming under increasing pressure to do something for the jobless. The administration's dilemma is compounded by changes in the law that it pushed through last year calling for further cutbacks in unemployment aid this September. This means that even maintaining current benefits will be expensive in terms of next year's tight budget, and any improvement in benefits will be very costly.
Unemployment benefits are already much scarcer than they were in the last major recession. At the height of that recession in 1975, over two-thirds of the jobless were receiving aid. Less than half are now being helped. Because of the prolonged economic downturn, many of the unemployed have used up all of the benefits to which they are entitled; others have not had enough work experience to qualify. But tighter rules for the unemployment insurance program have also been responsible for much of the difference.
One especially anomalous result of the cuts made this year is that in many states, where unemployed workers have been drawing extra weeks of unemployment benefits because of high local unemployment rates, these benefits have suddenly been switched off even though large numbers of workers are still jobless. In the last two months, 10 states including Maryland have experienced such a cut-off. It happens because the new rules don't count workers receiving extended benefits in determining whether unemployment is high enough to warrant extending benefits. As a result, as the number of long-term jobless increases, the extra benefits may be stopped for at least 3 months.
Come late September, when still tighter rules are due to go into effect, perhaps a dozen states may lose extended benefits entirely. That's not a happy prospect for either party going into the November election. But neither is the price tag on keeping the current rules in place. Rescinding the cutback planned for September could add $1 billion to next year's budget. Restoring the rules to what they were before last year's budget cuts could add another $1.5 billion. And there is also a great deal of understandable sympathy on Capitol Hill for adding additional weeks of benefits in those states where unemployment is very high--a potentially expensive proposition as well.
The old rules for providing extra weeks of unemployment aid were far from perfect--they tended to exaggerate the severity of unemployment just as the new ones tend to understate it. But the new rules don't seem to be something that the nation can live with while it goes through a deep recession--the very situation for which they were presumably designed. It's hard nowdays--when massive budget packages are hurried into law--to get Congress to focus on details. But some careful work is needed on a reasonable compromise that will not only get the administration and Congress through the elections, but also ensure that the hardest hit areas and people can make it through this and future recessions.