Are America’s jobless expendable in budget deal?

Bill Knight column for Mon., Tues. or Wed., Dec. 16, 17 or 18

A budget agreement has been reached in Congress but it ignores the long-term jobless, and if legislators don’t renew the current extended federal unemployment insurance (UI) program, 1.3 million jobless Americans will be cut off from UI on Dec. 28 and an additional 3.6 million people will lose UI benefits beyond 26 weeks by the end of 2014.

A group of House and Senate Democrats issued an urgent call to reauthorize aid for the long-term unemployed. Ways and Means Ranking Member Sandy Levin (D-Mich.) and Sen. Jack Reed (D-R.I.) introduced identical bills in both houses.

“It is shocking that Republicans have refused to include an extension of unemployment benefits in [the] budget agreement,” said AFL-CIO President Richard Trumka. “Lawmakers must not desert these workers by going home for their own holidays without extending the federal unemployment benefits program.”

The Unemployment Insurance system helps people who have lost jobs by temporarily replacing just part of their pay. The number of weeks of benefits available in any state depends on the unemployment rate and Unemployment Insurance laws in the state where someone worked. Without an extension, the only Unemployment Insurance next year would be state UI benefits, a maximum of 26 weeks in Illinois.

A separate Extended Benefit program ended in May of 2012.

The existing program, last extended in January 2013, provides up to 47 weeks of federal benefits in states with the highest unemployment rates on top of the 26 weeks. In Illinois, that’s meant workers unable to find new jobs can get up to 73 weeks of benefits. Extended unemployment was first enacted in June 2008 by President Bush when the jobless rate was 5.6 percent and the average length of unemployment was 17.1 weeks. As of November, the unemployment rate is 7.0 percent and the average duration of unemployment is 37.2 weeks, according to the Bureau of Labor Statistics.

The economy remains 2 million jobs behind after the Great Recession, said Sarah Ayres of the Center for American Progress.

“Labor market conditions are worse than the unemployment rate indicates,” she said, “because much of the improvement in the unemployment rate has been the result of individuals dropping out of the labor force, rather than entering employment.”

A new White House report, “The Economic Benefits of Extending Unemployment Insurance,” says almost 69 million people have been supported by Extended UI benefits, including workers’ families – and nearly 17 million children, adding “UI benefits lifted about 2.5 million people out of poverty.”

Christine Owens of the National Employment Law Project said, “The fate of millions of workers who are struggling to find work in the wake of the Great Recession is in the hands of the leadership in Congress. With the holidays approaching, it would be unconscionable for Congress to recess without reauthorizing federal jobless aid, leaving millions of families out in the cold.”

The nonpartisan Congressional Budget Office (CBO) last week said extending the program through 2014 would cost about $25 billion, but would boost employment by about 200,000 jobs by the end of next year. CBO and JPMorgan Chase studies both suggest that without an extension, the Gross Domestic Product will drop .2 to .4 percentage points.

That doesn’t seem to matter much on Capitol Hill.

“I don’t see much appetite from our side for an extension of benefits. I just don’t,” said Rep. Tom Cole (R-Okla.), a member of the budget conference committee.

Senate Majority Leader Harry Reid (D-Nev.) last Wednesday said the Senate won’t consider the unemployment insurance legislation until January.

If nothing’s done in this Do-Nothing Congress, what happens to the abandoned jobless? They may just drop out of the labor force, according to research from JPMorgan’s chief U.S. economist Michael Feroli, who says that many of those 1.3 million workers may just give up looking for jobs. That could reduce the “official” U.S. unemployment rate by between 0.25 and 0.5 percentage points, but it won’t mean things are improving.

“The urgent business before us now is fixing what’s wrong with our economy,” added Trumka, from the labor federation. “The real problem is that unemployment is too high and wages are too low. We call on Congress to enact a jobs bill, invest in our future, raise the minimum wage to $10.10, and devote its attention to restoring full employment and raising wages.”

[PICTURED: Photo from Progress Illinois.]