The deal to extend the payroll tax cut through the end of the year included a deal to “extend” unemployment benefits. I put “extend” in sarcasm quotes because the bill actually reduced that extension gradually. Instead of 99 weeks of unemployment to jobless workers in hard-hit states, the bill gradually backed that off to 79 weeks or less. This hurts the most vulnerable population in the labor force, the long-term unemployed, sadly a fast-growing sector even during this modest recovery.
Evidence comes this week, as eight states will see jobless benefits cut:
More than 230,000 jobless Americans will lose their unemployment insurance by this weekend as reductions in the federal program that provides extended benefits to the long-term unemployed take broader effect.
The new round of reductions is hitting eight states this month, meaning that about 400,000 long-term unemployed Americans in 27 states will have been cut off of the federal government’s extended unemployment benefits program this year, according to an analysis by the National Employment Law Project, which advocates for the unemployed […]
Most states provide 26 weeks of benefits, and the federal government provides the rest, partially through a complicated formula that requires jobless rates to be both high and increasing to reach the benefit limit.
But the nation’s jobless rate has been steadily declining — from 9.1 percent in August, to 8.1 percent last month — causing the maximum benefit period to contract in most states. The extended benefits were reauthorized in February, but efforts by some Democratic lawmakers to adjust the formula in a way that would have kept the 99-week limit intact were unsuccessful.
The states are California, Texas, Pennsylvania, Florida, Illinois, North Carolina, Colorado and Connecticut. It’s based on the “look-back” in the bill. Jobless rates in these states are now below what they were three years ago, though in some cases above where they were four years ago. But Congress did not extend the look-back to take this into account. As a result, hundreds of thousands will lose benefits.
Not only is this a tragedy for the long-term unemployed in these states, it’s a legitimate hit to the economy. Unemployment benefits are among the best stimulative programs we have, with one of the highest economic multipliers. Taking these benefits away means perhaps billions of dollars in economic activity going away.
The point is not to extend 99 weeks or more of unemployment benefits forever, but it’s to recognize that the recovery has not arrived for a significant subset of unemployed Americans, and that now is not the time to leave them behind.