COLUMN ONE : It’s Getting Easier to Hit Bottom : The ‘safety net’ above poverty, unemployment insurance, has developed gaping holes. That is now apparent to the middle class and is exacting an enormous human cost.

Not long ago, Cynthia and Dewaune Allen seemed to have it made: a house in the suburbs with three bedrooms for their four children, a BMW in the driveway and a stable, middle-class future.

But when the store where Cynthia worked went bankrupt, the Allens quickly discovered that without two incomes their middle-class status might not survive long. As she struggled through the bureaucratic hassles of obtaining unemployment compensation, Cynthia anticipated a few weeks, perhaps a month or two, between jobs. Last week, six months later and still out of work, she received her final unemployment check.

Although Dewaune still has his job, without Cynthia’s income the family teeters on the edge of economic calamity. Unable to pay the rent, they will soon have to give up their house, they say. The children have already been told not to expect presents this Christmas. With bills continuing to mount, the Allens are looking into their eligibility for food stamps.

“We were in pretty good shape,” Cynthia says. “Then everything went bad.”

As President Bush and congressional Democrats continue their months-old quarrel over whether and how to extend unemployment benefits, the plight of the Allen family--and those of millions of others who face even bleaker situations--reflect the reality behind the impersonal statistics of a nation in recession. And the current slump marks the first time that the erosion of unemployment coverage has hit home with members of the middle class.

That, in turn, has brought thousands of Americans face to face with an often-overlooked fact about the present condition of the government “safety net” that most had assumed would protect them from disaster: The nation’s unemployment insurance system, once a prime bulwark standing between the middle class and poverty, has been severely weakened by a succession of cutbacks and changes in government policies.

During the recession of the mid-1970s, nearly 60% of all unemployed received unemployment checks. This time around, only 38% are getting them.

Since March, some 2 million people have run out of unemployment benefits. Roughly 60% of those are believed to be still without work. In California, the number of people exhausting benefits--likely to reach 500,000 by year’s end--is 56% higher than a year ago, a trend mirrored throughout the country.

Overall, as of last month, 2.5 million Americans had been unemployed for 15 weeks or more and 1.1 million had been unemployed for more than 26 weeks. The numbers have almost doubled from the levels that prevailed in 1989, before the latest recession began.

Through all this, Bush and the Congress have been deadlocked.

Last winter, Democratic leaders in Congress began pushing a $5.3-billion proposal to allow the unemployed to collect benefits for 13 extra weeks--an action similar to that taken in every previous recession since 1958. The proposal would help 3 million people next year, congressional budget officials estimate, counting those who have already run out of benefits and would be reimbursed, plus those who would receive longer benefits in the future.

Bush twice vetoed those attempts, arguing that the Democratic plan was too costly and would increase the federal budget deficit.

Now, the White House has begun to bend--apparently in response to a rising tide of voter anger and frustration over Washington’s failure to deal with the economy.

The urge to negotiate became even more intense after Tuesday’s election in Pennsylvania, when former Atty. Gen. Dick Thornburgh lost a bid for a Senate seat. Thornburgh’s loss is widely seen as a reflection of voters’ anger over the Administration’s stewardship of the economy and at Washington’s seeming inability to help those in need.

Among those Washington seems too paralyzed to help is Patricia Carroll, a 45-year-old divorced mother of three in Virginia who lost her job as an office manager for an ailing commercial real estate firm in March. Carroll received her last unemployment check this week. Now, she is looking out over the financial abyss.

“Next week is going to be hysteria,” says Carroll.

With family expenses of about $2,600 a month, including $1,000 in rent for her three-bedroom townhouse in Fairfax, Va., Carroll is running out of options. Her relatives have been helping her keep above water so far. But her financial condition has been worsened, she says, because her ex-husband, an attorney, has been slow to pay child support.

Now, her son has been forced to drop out of college and is working three jobs. And, while she needs a cheaper place to live, she is not sure that she can get by on much less. “Affordable housing is impossible,” she complains. “I have a family to fall back on but I don’t know what people who don’t have that are doing.”

If the current negotiations over extending jobless benefits lead to a compromise, it will come only after enormous human cost.

Although federal and state governments are now spending some $26 billion on unemployment coverage, the coverage is reaching a smaller percentage of jobless Americans than in any recession in the last generation. More and more are still unemployed after their 26 weeks of benefits have been exhausted, and the benefits are no longer automatically extended.

Those facts are not the result of inadvertence. During the late 1970s and 1980s--especially during the Ronald Reagan era--federal and state governments deliberately pared down the unemployment program to reduce costs. Eligibility rules were tightened, restrictions were added. And laws were changed to make it harder to trigger additional weeks of compensation automatically when unemployment rates rose.

The changes worked: The program now is spending 30% to 40% less than it would have if past standards were in place today, Brookings Institution economist Gary Burtless estimates.

Families like the Allens and the Carrolls are paying the price.

And in addition to the impact on the unemployed, the changes in unemployment insurance also have had an impact on the overall economy, notes Wayne Vroman of Washington’s Urban Institute. The unemployment compensation program in the past functioned as a small but important “automatic stabilizer” that would pour extra money into the economy to stimulate activity during a slump. Now, with the program scaled back, it has much less ability to play that anti-recessionary role.

Unemployment insurance has always been a patchy system, a federal-state hybrid with benefit levels varying widely from one part of the country to another. In the past, the Americans most likely to notice those gaps were blue-collar workers. Today, the system’s shortcomings are painful news for millions who never thought such things would ever have anything to do with them.

As the recession has ripped through previously robust service industries and white-collar fields such as banking, insurance and law, many middle-class Americans have lost their jobs. And as they have faced unemployment, they have found that a gaping hole has been ripped in the safety net.

What’s worse, the jobless are finding that unemployment benefits simply are not lasting long enough to give them time to find jobs. “I’m sending out up to 15 resumes a week, and some places aren’t even answering your application,” sighs Carroll.

Carroll’s experience is typical. A 1988 study for the Department of Labor found that among people unemployed 26 weeks or more, some 60% remained unable to find a job even two months after their benefits had run out.

So far, Carroll refuses to take the next step down the ladder and accept welfare. “I’ll take a job at McDonald’s before that, or maybe two or three jobs at McDonald’s and Wendy’s. I won’t go on welfare.”

The existing system, however, offers few alternatives for those who are unable to find jobs. Typically, one government agency handles unemployment claims and a completely separate agency, with its own rules, regulations and red tape, handles benefits for the poor. In between, there is no agency or program standing ready to help those without jobs until they hit bottom and need food stamps, housing assistance or welfare.

Indeed, many aspects of the system work to break down whatever sources of stability the unemployed might have.

Bob Simpson, a 35-year-old mechanic from Baltimore, used to make $9.45 per hour at a truck-building company. When the company folded under the burden of debt taken on in a leveraged buyout, he managed to find a new job as a shipping clerk earning $7.50 an hour.

Then, in March, Simpson was laid off. With an unemployment check of $422 every two weeks, he and his wife found that they were unable to cover the costs of supporting their three children and their house in a working class neighborhood of the city.

To obtain welfare benefits for the children, Simpson and his wife separated. And the stress of the separation may actually have shattered the family. “Now it looks like we’ll never get back together,” he says.

While much of the focus during the current economic travail has been on the pain of professionals and middle-class, service-sector workers unemployed for the first time, the impact of this downturn, like every other, has fallen most heavily on the working poor.

In fact, the cutbacks in unemployment coverage have been ruinous for many unskilled workers who have lost their jobs. Thirty-five-old Ernest Seward of Richmond, Va., for example, has seen his life crumble since he was laid off as a roofer on a downtown Richmond construction project last winter.

After his unemployment benefits ran out in May, Seward lost his apartment and his wife divorced him, taking their young son with her. Like the Simpson family, the Sewards split up initially as a way to gain access to the welfare system--since regulations make it difficult for married couples to obtain those benefits. But their marriage continued to fall apart on its own.

Now, Seward’s wife and son live in a public housing project in Richmond, and Seward lives in a men’s homeless shelter.

So far, the only work Seward had been able to find is through day-labor pools that pay individuals to do odd jobs for companies that do not want to expand their full-time payrolls.

“This is the first time I’ve ever been homeless,” Seward said as he stood in the noisy clutter of a Richmond soup kitchen filled with jobless men waiting to be fed. “I’m looking for a regular job, but it’s hard. The system is putting us under so much pressure. I just don’t want my son to be out on the street like I am.”

In the increasingly competitive search for jobs, others fall behind for reasons of age. Paul Varinsky, a 60-year-old management analyst, was laid off seven months ago by a firm that did consulting work for the construction industry.

Now, his unemployment benefits are exhausted, and Varinsky has been forced to admit to himself a cruel fact of life--he is two years away from qualifying for Social Security benefits, but too old to be attractive to many employers.

“There are many, many young people out there looking for jobs, so even though I’ve got experience, today’s employer doesn’t want to pay for experience, or for benefits” he complains.

Fortunately, Varinsky’s children are all grown, and he is not yet in danger of losing his home. But he and his wife cannot make it for long on her job as a billing clerk.

“We’re going through our savings, but I don’t know how long that will last,” he says. “The middle class just really has to suck it up right now.”

Long-Term Unemployed

Total of those unemployed for 15 weeks or more: Oct. 1991: 2,537,000 Oct. 1990: 1,591,000 Oct. 1989: 1,377,000

Those unemployed for 15 weeks to 26 weeks: Oct. 1991: 1,410,000 Oct. 1990: 893,000 Oct. 1989: 730,000

Those unemployed for 27 weeks or more: Oct. 1991: 1,127,000 Oct. 1990: 698,000 Oct. 1989: 647,000 Source: U.S. Bureau of Labor Statistics