BEFORE THE END of this month, Congress must decide what to do about the expiring federal program that currently pays extra unemployment benefits to hundreds of thousands of jobless workers. With unemployment still at 9.5 percent, and with less than one-third of the jobless still eligible for regular benefits, extending the program is a political necessity. Budget pressures make the choice of an appropriate type of extension difficult. But so do the built-in deficiencies of the unemployment benefit system in dealing with the protracted unemployment especially characteristic of this recession.
The administration would naturally like to keep program costs low. It has proposed paying no extra benefits to unemployed persons who have used up earlier entitlements, and would limit extra benefits to workers still on the rolls to a maximum of 10 weeks. This is ungenerous treatment compared with other recent recessions. Not only is unemployment still very high by historical standards, but the permanent federal-state program of extended benefits --which is intended to provide an extra 13 weeks of benefits in states with especially high unemployment--has been effectively gutted.
While 14 states are still experiencing double-digit unemployment, only Louisiana and West Virginia are able to pay extended benefits under current law. But reinstituting the more generous pre-1981 rules would only add to the financial burdens of the hardest-hit states. A better approach, being proposed by the House Ways and Means Committee, would be to adopt a more generous version of the administration plan for a federally funded program. Up to 16 weeks of extra benefits would be paid in states with very high unemployment--counting all unemployed workers, not just those currently eligible for benefits --and unemployed workers who have used up their previous benefits would be covered. This would add about $1 billion to the $3.3 billion 18-month cost of the administration plan.
Something along these lines is probably the best compromise that Congress can come up with given the time pressure. But for all their hefty price tags, neither the Ways and Means Committee's approach nor the administration's does a good job of reaching the people who are in the most severe employment trouble--many of these people aren't even eligible for benefits. Extending unemployment benefits will give a short-term boost to hard-hit communities, but much of the extra money will go to people and areas not in serious trouble. That's because unemployment insurance is designed to be a countercyclical program helping experienced workers maintain their incomes during temporary layoffs. It was never intended to address the needs of people who, by virtue of their skills and location, are not likely to find decent jobs even as the recession subsides. Until Congress addresses this problem directly, the nation is likely to continue paying a very high price for unemployment programs that provide too little help to those who really need it.