Extended Unemployment Could Outlast Extended Unemployment Insurance
WASHINGTON -- The government announced Friday morning that the unemployment situation barely changed in October. The unemployment rate has been stuck above nine percent for a year and a half as nearly 15 million people are out of work. They will remain so for the foreseeable future, according to most estimates.
People who lost their jobs more recently may get less of a cushion than people laid off at the beginning of the recession. That's because Congress may lose its appetite for reauthorizing the extended unemployment insurance it created in 2008 and 2009.
According to the Labor Department, 6.2 million people -- 41.8 percent of all unemployed -- have been out of work for longer than six months. State governments provide jobless benefits for layoff victims for those first six months, and the federal government traditionally picks up the rest during recessions.
To fight the worst recession since the Great Depression, Congress has given the unemployed in hardest-hit states an unprecedented 73 weeks of additional benefits. During the second-worst recession in the early 1980s, Congress provided 55 weeks. It didn't begin to take them away until unemployment dropped to 7.2 percent.
House Speaker Nancy Pelosi (D-Calif.) told HuffPost on Thursday that reauthorizing the 73 weeks is her third priority in the upcoming lame duck session, after dealing with the expiring Bush tax cuts and providing a $250 cost-of-living benefit for Social Security recipients.
But once Congress reconvenes on Nov. 15, Pelosi and Senate Majority Leader Harry Reid (D-Nev.) will have just two weeks before the extended benefits expire at the end of the month. Republicans and conservative Democrats held up the previous reauthorization for nearly two months.
The progressive Economic Policy Institute estimates that keeping extended unemployment benefits through 2011 would create 723,000 jobs at a cost of $65 billion, or 1.7 percent of the White House's projected $3.8 trillion budget for that year. Most economists regard unemployment insurance as among the most economically stimulative fiscal policies.
It will be extremely difficult for lame-duck Democrats to get such a lengthy reauthorization. The previous four efforts each lasted for a few months at a time. If the next reauthorization is similarly short, that means it will come due on the watch of incoming House Speaker John Boehner (R-Ohio), who will probably not be amenable to tens of billions in deficit spending specifically requested by President Obama. Congressional Democrats have refused to compromise on offsetting the cost of unemployment benefits, which are traditionally given an emergency designation.
"Congress doesn't have to be a lame duck -- it can make a huge impact now by renewing for another year the jobless benefit extensions that expire on November 30th," said Christine Owens, director of the National Employment Law Project, in a statement Friday. "If Congress fails to act, two million workers will be cut off next month alone -- in the heart of the holidays -- and any brief stopgaps will still put millions at risk of cut- offs next year. Congress simply cannot pull the plug on families and businesses if it has any realistic intention to turn things around."
There are lots of people who are still unemployed after 99 weeks of benefits (though nobody knows how many). It's unlikely they'll get any more help from Congress.
President Obama said Friday in light of the bleak employment situation that part of his strategy to create jobs includes "extending unemployment benefits to help those hardest hit by the downturn while generating more demand in the economy."