The Unemployment Compensation Extension Act of 2009 extends federal unemployment insurance by 13 weeks for workers who have exhausted their unemployment benefits. The 13-week extension, which builds on two previous expansions, applies only to states with unemployment rates of 8.5 percent or higher. Depending on state residency, a worker can currently obtain unemployment benefits for a maximum of 79 weeks.
The legislation extends a 30-year-old federal unemployment tax for an additional year in order to pay for the extensions.
The Middle-Class Position:
Middle Class Supports. While economists see signs of economic recovery, 14.9 million unemployed Americans still cannot find work. The unemployment rate continues to rise and now stands at 9.7%, keeping middle-class Americans at risk of being thrown out of work as a result of the economic downturn. According to the National Employment Law Project, 5 million Americans have been unemployed for six months or longer and half of the unemployed cannot find jobs within the first six months of receiving unemployment insurance benefits. There are 6 jobless workers for every job opening. Recent extensions of the duration of unemployment benefits have been necessary but insufficient: 400,000 unemployed workers will have exhausted their benefits by the end of September, a number that will increase to a devastating 1.3 million by the end of the year.
The Unemployment Compensation Extension Act would ease the financial pain associated with long-term unemployment. Unemployment benefits provide direct assistance to the current and aspiring middle-class Americans likely to be hardest hit during the economic downturn, people who want to work but have lost their means of support through no fault of their own. The legislation would ensure that the jobless in the worst-hit states – places like Michigan that has an unemployment rate of 15.2 percent – would avoid losing unemployment insurance at a time when finding a job is extremely difficult. The bill would prevent approximately 300,000 unemployed Americans in 27 states from losing their unemployment benefits. Though workers in all states are exhausting their benefits and more comprehensive legislation would assist them all, more than 80 percent of workers who will exhaust their benefits by the end of the year will be eligible for the extended benefit.
In addition to the benefit to individual households, unemployment insurance provides significant economic stimulus. The unemployed tend to spend all of their benefits and quickly, providing an important economic jolt. Allowing unemployment benefits to expire for hundreds of thousands of families would undermine the successes of the American Recovery and Reinvestment Act and slow recovery.
From the Experts:
“To avert disaster, Congress must expand jobless benefits, and it must make this a top priority. The alternative is that hundreds of thousands of workers will be left out in the cold without a paycheck or unemployment check to cover their mortgages and bills, or provide for their families. Failure to act quickly to expand benefits for those running out will deal a severe setback to the hoped-for recovery. Benefits extensions not only help struggling families stay afloat, they provide direct stimulus for local economies.” –Christine L. Owens, Executive Director, National Employment Law Project (September 4, 2009)
“[U]nless Congress acts, we expect that more than 400,000 workers nationwide will exhaust their federal extended benefits by September, with exhaustion rates expected to increase over the coming months. We strongly urge immediate action to extend the vital unemployment insurance provisions contained in the American Recovery and Reinvestment Act, as well as an extension of additional emergency unemployment compensation benefits to help the long-term unemployed weather this economic storm.” –Bipartisan Letter from 22 Governors to Congressional Leaders (September 15, 2009)
Beyond this Bill:
It is well-known that the unemployment rate “lags” in a recession. This means that when economic growth returns, most households – and particularly the unemployed – still experience little or no relief in the short term. Though this is accepted as a rule of thumb, policymakers have done very little beyond ad hoc extensions of unemployment benefits to account for it. Though the American Recovery and Reinvestment Act includes important benefits for the unemployed, such as increased unemployment benefits and a subsidy for health insurance, these provisions will expire over the next several months even as unemployment lags behind economic growth. Moreover, the longer bouts of unemployment during the current recession mean that many households will continue to be at risk of running out of unemployment insurance which, according the San Francisco Federal Reserve, “will further offset the intended roles of [unemployment insurance] payments as an automatic stabilizer and means of low-income support.” Even with extended unemployment benefits, long-term unemployment can lead to a loss of the skills and knowledge necessary to function in today’s complex economy. At the very least, the more generous benefits provided in the American Recovery and Reinvestment Act should be extended until the unemployment rate has significantly declined. But policymakers must also reconsider how the social safety net can be adapted to the needs of workers during – and between – future recessions.
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