EVEN BEFORE last week's press conference at which President Reagan announced his firm opposition to continuing federal supplemental unemployment benefits, chances were small that Congress would continue the program when it expires at the end of this month. Unemployment is still very high in many states, and hundreds of thousands of workers who have run through their state entitlements will no longer be helped. But Congress is reluctant to continue the program partly because of the already imposing federal deficit, and also because of a growing concern that the unemployment insurance system needs a substantial overhaul.
One worry is that a simple extension of cash benefits for the long-term unemployed may hinder -- or at least not help -- their efforts to find new jobs. Responding to this concern, state governments have been trying to use unemployment funds to help workers find new jobs, acquire needed skills or even create new jobs. A conference sponsored last week by the Boston Federal Reserve Bank and the Kennedy School at Harvard suggested considerable agreement among state officials, business leaders and academics -- and, to a more limited degree, labor officials -- that programs such as these can help some workers adjust to a rapidly changing economy and can rebuild public support for the unemployment insurance system.
Almost all states have been strengthening links among private employers, job training programs and state-run employment services. California and Delaware have gone farther to earmark part of the unemployment benefit tax on employers for programs for retraining workers permanently displaced from their jobs. Canada -- following the example of California -- is using unemployment funds to pay workers who have agreed to reduce their days of work so that other workers won't be laid off. In Great Britain and France, where small-business ventures are much rarer than in this country, some unemployed workers are receiving lump-sum benefit payments to help them get new businesses off the ground.
A major barrier to the extension of these efforts is the fact that unemployment insurance in this country is funded by a payroll tax that is itself a considerable discouragement for employment. Even if new types of jobless help ultimately pay off, higher payroll taxes will simply aggravate the already large bias in the tax system toward substituting machines for people. The problem is compounded by the requirement that each state fund its own program, so that states with the most severe unemployment problems are least willing and able to pay for innovative kinds of help.
Unfortunately, coming up with a better and fairer way to finance jobless benefits would require addressing the unpleasant subject of the inadequacy of federal revenues to cover necessary national expenses. That's why Congress isn't likely to do anything about reforming unemployment insurance in the foreseeable future.