Long-term unemployment benefits expire: 6 things to know
Some 1.3 million Americans, including about 222,000 Californians, lost jobless benefits Saturday as the federal program to assist the long-term unemployed expired.
Here are six things to know about who is affected and why the benefits went away.
Who lost benefits?
Anyone who has been collecting unemployment for more than 26 weeks loses benefits, roughly 1.3 million people immediately. Several million more people are expected to hit the limit over the course of the next year; they would lose benefits at that point. The Obama administration estimates that by the end of 2014, 4.9 million people will have been affected.
Why the change?
In good times, the federal government and the states jointly provide up to 26 weeks of unemployment benefits, paid from employer payroll taxes, to people who lose their jobs.
The idea, which dates to the 1930s, is to help laid-off workers until they can find new jobs. Well over half of Americans either collect unemployment insurance during some part of their working lives or are married to someone who does.
During periods of high unemployment, the federal government has expanded the unemployment insurance program with money from the general fund.
In June 2008, when the recession was young and the unemployment rate was 5.6%, Congress approved a 13-week extension. As the recession deepened, Congress passed additional expansions. At its peak, the program offered up to 99 weeks of coverage. It’s been scaled down gradually ever since.
Two states with high unemployment, Illinois and Nevada, had offered 73 weeks of benefits. California had offered 63 weeks, and most others offered 43 to 63 weeks.
Virginia, Vermont, New Hampshire and a group of Great Plains and Mountain states, several of which have relatively low unemployment because of the boom in oil and natural gas production, had offered 40 to 42 weeks.
But those extensions expired Saturday, and all states dropped to 26 weeks or fewer.
Which states will be hit hardest?
California, Nevada, Illinois, Pennsylvania, Connecticut, New York, New Jersey and Massachusetts are among the states with significantly higher-than-average percentages of long-term unemployed people.
Why hasn’t Congress extended unemployment insurance again?
Democrats have pushed for another extension, but most Republicans have opposed the idea, resulting in a stalemate so far.
President Obama, who faulted Congress last week for inaction on the issue, called two senators Friday whose pending legislation would extend benefits for three months and praised them for “working in a bipartisan fashion” on a problem that he said would adversely affect the nation’s economic growth and job creation.
He called on members of Congress to make the temporary extension of benefits “their first order of business” when they go back into session next year. Obama said that if lawmakers approve it, he would sign the proposal “right away.”
The prospects for getting the bill through the Republican-controlled House, however, appear dim.
What are the arguments for allowing benefits to expire?
Republicans have advanced three arguments:
They said that the extension was always supposed to be temporary and now that nationwide unemployment has dropped to 7%, it’s time to go back to the basic of up to 26 weeks of coverage.
Extending benefits for an additional year would cost roughly $25 billion, they noted, which would add to the federal deficit.
Some Republicans also argue that extended unemployment benefits provide a crutch that discourages people from looking for work.
What are the arguments for extending the program again?
Democrats and a few Republicans noted that even though the overall unemployment rate has dropped, the problems faced by the long-term unemployed remain grim. The share of the nation’s workforce that has been unemployed for 27 weeks or longer has dropped, but at 2.6%, it remains as bad as the peak of long-term unemployment in any previous recession since the end of World War II.
Proponents of extended unemployment insurance scoff at the idea that the benefits deter people from looking for work. The problem, they said, is that jobs remain hard to find. Some evidence suggests that companies discriminate against people who have been out of work for a long time.
As for the cost of benefits, supporters argue that by injecting money into the economy, unemployment benefits spur growth as recipients buy goods and services. The economy remains weak, they argue, and if anything, the federal deficit for the next couple of years should be larger, not smaller.
Federal Reserve Chairman Ben S. Bernanke made that point in a recent news conference, saying that fiscal policy was too tight and that the economy would produce more jobs if Congress eased up in the short term.
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