Shrinking Unemployment Benefits Mean Fewer People Kept out of Poverty

Tuesday, October 22, 2013 at 11:11 AM by

Today’s job numbers show little improvement in long-term unemployment

Unemployment benefits kept nearly two million people out of poverty last year, but that number has declined dramatically in recent years as policymakers have curtailed benefits available for unemployed workers, according to a recent report from the Center on Budget and Policy Priorities.  And it will fall much more dramatically in January if Congress does not renew the federal extended benefits for the long-term unemployed.

In 2012, unemployment benefits lifted 1.7 million people above the federal poverty line, down from 3.2 million people in 2010, as shown in the chart below.  Part of that decline in the number of people kept out of poverty stems from the fact that fewer workers are unemployed and therefore receiving unemployment benefits, but a much larger portion of the decline stems from the fact that fewer workers that are unemployed are receiving benefits. According to the report, the number of UI (Unemployment Insurance) recipients for every 100 unemployed workers fell from 67 in 2010 to 48 in 2012.

Why are unemployed workers less likely to receive unemployment benefits in 2012 than they were in 2010?  Benefits for unemployed workers who have been searching for jobs for long periods are federally funded, and the maximum number of weeks of those benefits has been drastically curtailed.  Federal benefits, which at one point offered a maximum of 73 weeks to unemployed workers in some states, are now limited to a maximum of 47 weeks, based on the state’s unemployment rate.  In Wisconsin, jobless workers have access to a maximum of 28 weeks of federally-funded unemployment benefits – benefits which are slated to be eliminated at the end of the year, unless Congress prevents that from happening.

There have also been actions taken at the state level that make it more difficult to get unemployment benefits, and have likely reduced the number of people benefitting. Since 2011, Wisconsin legislators have:

  • Added a requirement for a one-week waiting period before unemployed workers can receive benefits;
  • Upped the number of job searches jobless workers must undertake to receive benefits;
  • Limited the reasons for which a jobless worker can quit a job and still receive benefits; and
  • Broadened the reasons for which a terminated worker can be denied benefits.

The poverty rate has remained stubbornly high since the end of the recession, and the economic recovery remains “agonizingly slow for vulnerable families,” according to this Wisconsin Council on Children and Families press release.  One reason that the poverty rate hasn’t dropped as quickly as anyone would like is that unemployment benefits are available to fewer jobless workers.

National job numbers released today show that the recovery is still rather anemic, and the high unemployment rate has been especially stubborn for the long-term unemployed. Nearly four out of 10 jobless workers have been out of work and looking for a job for 27 weeks or more.  If Congress does not reauthorize the federal extended benefits program, that lifeline for the long-term unemployed will end abruptly in late December.

Tamarine Cornelius


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