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Unemployment At Risk If Congress Doesn't Act

The Washington Post published their “graph of the day” on Tuesday, and it wasn’t pretty. It was created by the National Employment Law Project (NELP) as part of a paper urging lawmakers not to “push jobless Americans off the cliff.”

According to Washington Post:

About 3 million jobless workers will still receive benefits through state programs. But the two programs that are soon set to shrink are the Emergency Unemployment Compensation program, which provides up to 47 weeks of additional benefits (depending on a state’s jobless rate) and the Extended Benefits program, which provides another 20 weeks to certain eligible workers.

Recently, the Congressional Budget Office estimated that the two federal unemployment programs could be extended for another year at a cost of $30 billion. Since unemployment insurance is a particularly effective form of stimulus — most workers spend the money fairly quickly — that would boost GDP by an estimated 0.2 percentage points.

The National Employment Law Project is quite informative, providing history on the unemployment benefit program:

In June 2008, after the recession had begun but before it was declared, Congress authorized and President Bush signed into law the Emergency Unemployment Compensation program. At the time, the unemployment rate stood at 5.6 percent. As high unemployment persisted throughout the Great Recession and the nation’s slow recovery, Emergency Unemployment Compensation was reauthorized on 10 occasions, most recently in February 2012 as part of the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96).

Not only is the unemployment rate more than 40 percent higher today than when the Emergency Unemployment Compensation program was first enacted, the crisis of long-term unemployment is also far more severe. In June 2008, about 18 percent of the unemployed were considered long-term unemployed, that is, out of work for more than six months. By contrast, today, an astounding 40.6 percent of all jobless workers (five million people) are long-term unemployed. And this figure has improved only slightly since the last time Congress reauthorized Emergency Unemployment Compensation in February 2012. At that time, 5.4 million workers were long-term unemployed, representing 42.6 percent of all the unemployed.

Not surprisingly, the February 2012 restructuring of the Emergency Unemployment Compensation program (and the virtual elimination of the Extended Benefits program) also contributed to a dramatic reduction in the number of workers receiving federally funded unemployment benefits. Since February, roughly 1.2 million fewer workers accessed federal unemployment benefits, even though the national unemployment rate has dropped less than half a percentage point and the number of unemployed workers has decreased by only 550,000.

If the Emergency Unemployment Compensation program is not reauthorized, the share of jobless workers receiving unemployment insurance in the United States will likely decrease to approximately one in four.

The benefit reductions imposed by the February 2012 law have already produced a decline in the number and share of unemployed workers receiving Emergency Unemployment Compensation benefits disproportionately greater than the actual decline in long-term unemployment. Given the ongoing national crisis of long-term unemployment, the Emergency Unemployment Compensation program should remain in place for another year without further cuts in benefits.

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