Top Ten Things to Know about the Expiring Federal Unemployment Benefits
Federal Lifeline for the Unemployed Ends Dec. 28th, but the Debate Will ContinueFederally funded unemployment insurance benefits, known as emergency unemployment compensation (EUC), will expire at the end of this week. However, the debate on this issue will continue into 2014, as Senate Democrats seek an opportunity to restore the EUC program. (See, for example, this article about Senator Reed’s proposal.) Here are ten key things to know about the EUC program, which expires on December 28: 1) The maximum length of unemployment insurance benefits will immediately drop to the 26 weeks of state benefits, which is slightly less than half the current limit in Wisconsin of 54 weeks of combined state and federal benefits. (That has already been reduced from a maximum of 99 weeks during the worst of the recession.) 2) There are 1.3 million long-term unemployed workers across the country who will lose this lifeline next week, including about 23,700 jobless workers in Wisconsin. 3) Over the course of 2014, the program’s termination is expected to adversely affect 99,000 long-term unemployed workers in Wisconsin and their households, as well as 2.2 million jobless workers across the U.S. 4) The Bureau of Labor Statistics estimates that there are now almost 3 unemployed workers for every job opening, which is a worse ratio than at any point during the 2001 recession. 5) As the following bar graph illustrates, the unemployment rate for the long-term unemployed is now twice as high as it has been at any other time when EUC benefits were terminated. 6) The National Employment Law Project (NELP) estimates that the termination of the EUC program will reduce unemployment benefits in Wisconsin by $361 million in 2014, which is a very large hit to the Wisconsin economy, especially for communities with high rates of long-term unemployment. 7) According to the Economic Policy Institute, cutting off EUC benefits will cost the national economy 310,000 jobs in 2014 and is likely to reduce the economy’s growth rate by 0.4 percentage points. 8) The following bar graph shows that federal spending on EUC benefits peaked in Wisconsin in fiscal year 2009-10 at more than $1.2 billion and would drop to about 70% less than that in FY 2013-14, if the program continues – which illustrates how this important counter-cyclical program could be phased out rather than terminated. 9) The average weekly EUC benefit in Wisconsin over the past year was about $240 (based on our analysis of Bureau of Labor Statistics data). 10) As Ezra Klein explained in a recent post on Wonkblog, employers filling openings often discriminate against the unemployed. His column illustrates that “the problem for the long-term unemployed isn’t that their lavish government checks keep them from wanting jobs. It’s that they can’t get jobs…”To sum up, the abrupt termination of federal unemployment compensation benefits will be a devastating blow for the long-term unemployed and their families, and also a harsh blow for the slowly recovering economy. Michael Strain of the conservative American Enterprise Institute nicely summarized why lawmakers “shouldn’t let emergency federal benefits expire.” Strain wrote:
“…the same fundamental logic that led to their being (correctly) enacted still holds today: The labor market is still in bad shape, the economy is still weak, there are three times as many unemployed workers as job openings.”Read more in this short Dec. 18th Budget Project paper, which contains estimates of the number of people in each county who will lose their EUC benefits in 2014 if the program isn’t reinstated by Congress.