Overview:
As Congress approaches adjournment, the Republican leadership in the House has yet to schedule a vote on extending unemployment benefits for displaced workers.1 Last year, Congress actually left town before enacting an unemployment extension – leaving more than 800,000 jobless Americans worried that their benefits would be terminated a few days after Christmas. Only after considerable public pressure and continued demands from Democrats did Republicans agree to provide a limited extension on January 8, 2003.
Should the Republican leadership bring an unemployment bill to the House floor in the coming weeks, it appears the legislation will once again fail to provide any assistance to those individuals who already have exhausted their extended benefits. For example, Representative Jennifer Dunn (R-WA) has introduced legislation (HR 3270) that would continue the current Temporary Extended Unemployment Compensation (TEUC) program, but would not provide any new assistance to workers who already have run out of their first round of extended benefits (which last for 13 weeks in most States). This will exclude most workers who have been unemployed for nine months or longer from receiving any additional help.
Unemployed Treated Better in the Past:
This indifference to the long-term unemployed is not supported by past precedent or current economic data. During the last recession in the early 1990s, Congress provided a much more generous extension of benefits for unemployed workers.2 The 1990s program, which generally provided either 26 or 20 weeks of benefits, continued this level of assistance until well after the economy had recovered all of the jobs lost in the recession (see Chart 1).
Current Job Market is Still Bleak:
According to data from the Department of Labor, the U.S. economy has lost 2.7 million jobs since March 2001. This has been the longest period of declining employment since the Great Depression (see Chart 2). Furthermore, the current national unemployment rate (6.1%) remains higher than when the TEUC program was established in March 2002 (5.7%). Finally, according to an August 2003 report by the Federal Reserve Bank of New York, the current recession was marked by "the predominance of permanent job losses over temporary layoffs."
Some have pointed to last month’s modest gain of 57,000 jobs as evidence of an improving employment market (the first job gain in eight months). However, this report has to be viewed in the context of the steep job losses that preceded it. For example, even if the economy created twice that many jobs every single month, it still would take two years to recover all of the jobs lost during the current downturn.
Long-Term Unemployment is Rising:
The prolonged period of declining job opportunities have led to a steep increase in long term unemployment. In fact, the percentage of jobless workers who are running out of their regular unemployment compensation without finding work has reached an all-time high (see Chart 3). Furthermore, the number of long-term unemployed workers (defined as jobless for at least six months) has more than tripled since January 2001.
While continuing the current TEUC program is a useful step that will help some workers, it must be combined with an extension for those who already have run out of their extended benefits. Otherwise, a projected 2.4 million long-term unemployed workers will not benefit from the so-called unemployment extension (see Chart 4).
Those against helping the long-term unemployed have suggested the current TEUC program does provide additional weeks in certain States with high unemployment. However, only five States currently qualify to provide those additional weeks.3 Other States with relatively high unemployment, including California, New York, Texas, Illinois, Louisiana, and Mississippi are not eligible.
The triggers currently used to determine high unemployment fail to capture a State’s true level of unemployment. For example, the TEUC program’s primary trigger, a State’s insured unemployment rate or IUR, does not even count individuals receiving extended unemployment benefits when counting a State’s jobless population.
Unemployed Households are Hurting:
Unemployed households have few resources to sustain them when they lose benefits. One study found that 80% of workers who become unemployed have savings equal to less than two months of income when they lose their jobs.4 Another survey found that half of those unemployed for nine months or longer had to borrow money to meet even basic expenses.5
The Money Has Been Saved to Help the Long-Term Unemployed:
It is important to note that the Federal Unemployment Trust Funds have roughly $20 billion in reserves, so the money is there to provide an adequate benefit to the millions of unemployed Americans. These funds were paid into the unemployment compensation system just for the purpose of helping dislocated workers during difficult economic times.
The Rangel-Cardin Bill Would Extend Benefits for All Unemployed Workers:
Representatives Charles B. Rangel and Benjamin L. Cardin have introduced legislation (HR 3244) that would help the Nation’s long-term unemployed by not only continuing the existing extended benefits program, but also by extending assistance to those have exhausted their TEUC benefits. In general, the bill would continue the TEUC program through the first half of 2004, increase the amount of benefits to 26 weeks (up from 13 weeks), include coverage for workers who already have exhausted their extended benefits, and expand unemployment insurance coverage for low-wage and part-time workers (see Chart 5).
The clock is now ticking for Congressional action on this very important issue for millions of Americans who have lost their jobs through no fault of their own.
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