1.3 Million Losing Unemployment Benefits Saturday Thanks to Budget Deal
Those few days between Christmas and New Year's are often draining. You're tired, you're sick of your family, you've overdosed on pie. But for over million Americans, this particular weekend will be especially difficult. Thanks to this month's budget deal, the emergency federal unemployment program expires Saturday, cutting off benefits for over 1.3 million jobless U.S. citizens. Across the country, anyone who has been collecting unemployment for over 26 weeks will stop getting their paychecks. That's roughly 125,000 people in New York, 215,000 in California. Over 90,000 people will be hit in New Jersey, a striking 1 percent of the state's population. In fact, just one in four jobless Americans will now be receiving unemployment benefits, the smallest proportion in fifty years.
The federal long-term unemployment program was launched in 2008, when the Great Recession was at its peak and families were struggling to put food on the table. Basically, it gave up to 47 weeks of extra payments to people who lost their job, in addition to the 26 weeks of benefits that the state would provide. But because this month's budget deal included no funding to keep these benefits going, now, the unemployed will only be eligible for the original 26 weeks of aid, max. Anyone who's been collecting benefits for over 26 weeks will be cut off straight away. By the end of June, 1.9 million more will also lose their benefits. By the end of 2014, it's estimated that a total of 4.9 million people will have been hit.
So why didn't the extension make it into the two-year budget deal that was just passed by Congress? Many Republicans argued that the program was always meant to be a temporary measure, pointing out that — now that the unemployment rate has dropped to 7 percent — this is the time to go back to the basic 26 weeks and save the $19 billion it would cost to extend the program through 2014.
“I do support unemployment benefits for the 26 weeks that they’re paid for,” said Senator Rand Paul of Kentucky. “If you extend it beyond that, you do a disservice to these workers. When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy.”
Here's something to bear in mind, though. Although the overall national unemployment rate has dropped, the proportion of those who've been unemployed for over 27 weeks is at 2.6 percent, as bad as it's been since World War II (New York, New Jersey and California being among the worst, in terms of percentages of long-term unemployed people). And those who've been jobless for 27 weeks have only a 12 percent chance of finding a new position in a given month — in fact, job prospects for the long-term unemployed are worse today than they were during the recession in 2007. That's on top of the fact that there are, today, three job hunters for every possible job. Most worryingly, the average jobless worker takes roughly 35 weeks to find a new employment — meaning that most people will see their aid cut off before they find a new job.
The unemployments benefits have also actually been stimulating the economy, by allowing job-seekers to keep spending on goods and services — if they'd continued, the GDP would have seen an estimated 0.2 percent boost by next year. And although economists have predicted that the end of the emergency program may lead to a further decrease in unemployment rate — because people who've been holding out for higher-paying jobs might accept lower-paying positions — thousands of families will be plunged below the poverty line over the next year regardless.
“I don’t know if our colleagues who have opposed passing the unemployment-insurance legislation know or care about the impact on families,” said Nancy Pelosi, the House minority leader. “The impact is very, very strong. It hurts the dignity of a family, of a worker.”
A recent survey by the National Employment Law Project saw that only 33 percent of Americans are opposed to extending benifits, while 55 percent are in favor; which just goes to show that the American public has more common sense than (most of) the Republican caucus.
But in many ways, extending emergency benefits treats the symptoms and not the cause of the problem, and there are other ways the government could be going about dealing with long-term unemployment. Economists have in fact come up with a wide range of creative solutions, from relocation assistance to tax incentives to work-sharing programs. But that would involve Congress actually dealing with issues, which, as we've seen throughout 2013, is a rare occurrence.