Encouraging Jobs Report Doesn’t Justify Plan for Slashing Extended Unemployment Benefits

Tuesday, February 7, 2012 at 2:31 AM by

For the first time in a long while, a monthly jobs report showed national employment growth that was well ahead of expectations. The increase of 243,000 jobs shown in last Friday’s report, coupled with the drop in the unemployment rate to 8.3%, is very encouraging news. Nevertheless, the U.S. economy has a long way to go before it we can say it’s healthy, and the number of long-term unemployed Americans who need extended federal jobless benefits remains at an extremely high level.

A Journal Sentinel article by John Schmid notes that there were still 12.8 million jobless Americans in January, which is more than twice the number of people (of all ages) in Wisconsin. He added to that figure the 8.2 million people who are under-employed and 2.8 million discouraged workers (who have dropped out of the labor force), bringing the total of unemployed or underemployed Americans to 23.8 million.  That’s the equivalent of a little more than 4 times the Wisconsin’s total population!

Another sobering statistic is that the U.S. now has about 5.6 million fewer jobs than it did when the recession began in late 2007, even though the U.S. population has been growing. Heidi Shierholz, a labor economist at the Economic Policy Institute (EPI), cautioned that “even at January’s growth rate, it would still take until 2019 to get back to full employment.”

EPI’s recent Economic Snapshot shows that the share of unemployed workers who have been out of work for more than six months, which is the maximum length of regular benefits in most states, is now 42.9%, compared to an average of just 17.5% in 2007, and only slightly below the peak of 45.5% in March 2011.

“The fact that there has been so little improvement in job-finding prospects for unemployed workers shows that it is much too early to begin cutting back on how long unemployed workers can receive benefits,” wrote Shierholz.

Chad Stone of the Center on Budget and Policy Priorities noted in a recent CBPP blog post that there are currently four jobless workers for every job opening. He added:

“Nothing in today’s report should deter Congress from moving quickly to enact payroll tax cut/unemployment insurance (UI) legislation that would extend the provision of temporary federal emergency UI compensation through the end of the year — without cutting benefits or imposing new barriers to receiving benefits.” 

Even before the jobs gains for January were announced, House Republicans came to a very different conclusion about unemployment insurance (UI) benefits. According to the National Employment Law Project (NELP), the UI plan that House Republicans are advocating (H.R. 3630) would do the following:
       •  Slash federal UI benefits by more than half in the highest unemployment states.
       •  Cut off UI benefits prematurely to nearly 3 million Americans and their families.
       •  Allow mandatory drug testing of UI claimants, stigmatizing jobless workers.
       •  Make jobless workers pay for their reemployment services.
       •  Deny benefits to those not fortunate enough to finish high school or GED.
       •  Let states reduce benefits and divert unemployment benefit funds to other uses.

NELP has also prepared a more detailed critique of the House proposal.

We’ll continue to follow the matter of extending UI benefits closely over the next few weeks, as we approach the deadline at the end of February for renewing the extended benefits program.

Jon Peacock

Categories: Blog, economy, federal issues, jobs, unemployment benefits | Comments Off on Encouraging Jobs Report Doesn’t Justify Plan for Slashing Extended Unemployment Benefits

Comments are closed.