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Long-term unemployment graph 2012
As I pointed out Monday, two million Americans will lose their federal Emergency Unemployment Compensation benefits on Dec. 29 if Congress doesn't act. But the situation is actually worse than that. Another million will subsequently lose benefits in the first quarter of 2013, 400,000 of them in January alone, says the National Employment Law Project. In addition, if the unemployment rate does not fall sharply, another two million out-of-work Americans will not be able to collect federal benefits next year. Altogether, five million workers who would have received federal benefits will not.

There is also one more stinger, according to the Economic Policy Institute. If unemployment insurance benefits are not extended, it will cost the nation hundreds of thousands of jobs:

Spending $30 billion on unemployment benefit extensions in 2013 would increase consumer spending and expand GDP by an estimated $48 billion, raising our $15.8 trillion GDP by roughly 0.3 percent. This increase in economic activity would translate into roughly 400,000 jobs. In comparison, continuing the upper-income Bush-era tax cuts in 2013 would cost $52 billion—nearly 75 percent more than continuing the UI extensions—and generate just 102,000 jobs, nearly 75 percent fewer jobs than the number created by continuing the UI extensions.
Behind all those numbers are individuals. Millions are people who are paying their bills—some of their bills, at least—because they had work but can't find any now and are getting jobless benefits until they do. In other words, people hanging on by the skin of their teeth and a weekly government check. Hundreds of thousands have jobs, even if not the best-paying jobs in our low-wage economy, because the recipients of those checks are spending money in businesses that wouldn't otherwise be there or at least wouldn't have hired as many workers.

Unemployment insurance has been with us in all 50 states and the District of Columbia and Puerto Rico since the New Deal. It's a joint federal-state program funded by payroll taxes. For more than half a century, each state set the normal duration of benefits paid out at 26 weeks. Since 1958, during recessions, Congress has enacted additional benefit weeks, "emergency" extensions. In the case of the most recent downturn, total benefits boosted by emergency extensions in the hardest hit states totaled 99 weeks. A budget deal in February reduced that to a state-federal maximum of 73 weeks. In most states, it's considerably less than that based on the local unemployment rate, in some places as low as an extra 14 weeks.

Because long-term unemployment levels have soared to a post-Depression record in the recession that began in December 2007, many out-of-work Americans, many as in millions, have exhausted their regular state benefits, the state-federal extensions and the federally funded emergency extensions. But if Congress doesn't act, those millions are going to have a bunch of company:

Not only is the unemployment rate more than 40 percent higher today than when the EUC program was first enacted, the crisis of long-term unemployment is also far more severe. In June 2008, about 18 percent of the unemployed were considered long-term unemployed, that is, out of work for more than six months. By contrast, today, an astounding 40.6 percent of all jobless workers (5.0 million people) are long-term unemployed. And this figure has improved only slightly since the last time Congress reauthorized EUC in February 2012. At that time, 5.4 million workers were long-term unemployed, representing 42.6 percent of all the unemployed.
Why? Because, by the latest count, there are still 3.4 job-seekers for every job opening.

(Continue reading below the fold.)

In the past half-century, emergency extensions have never been axed when the official unemployment rate was above 7.2 percent. It's now 7.9 percent and unlikely to fall below the previous cut-off point before mid-2013 at the earliest. If the EUC program is not extended, only about one-in-four out-of-work Americans will receive unemployment insurance, a record low for the current level of joblessness. That means nine million of the 12 million now officially unemployed would not be covered. Of course, many people now out of work weren't covered to begin with. Even at the peak of the Great Recession, only 75 percent of the jobless were covered. Today, it's about 40 percent.

The Congressional Research Service recently calculated that 26 million Americans, that is, workers and their families, benefited from UI payments in 2011. As a result, 2.3 million people, a fourth of them children, were lifted out of poverty, a greater impact than in the 1991 and 2001 recessions.

Every time Congress considers an extension of UI benefits, several Republicans toss out criticisms, which, boiled down, amount to: unemployment compensation makes people lazy; they would find jobs if they weren't paid to lay around. In fact, as Lawrence Mishel and Heidi Shierholz at EPI point out, in the most thorough study of the matter (conducted by Jesse Rothstein), only a tiny fraction of the unemployment rate can be attributed to UI benefit extensions.

One more matter of importance: While the 2013 cost of extending benefits is estimated at $30 billion, $18 billion of that would be recovered from the taxes paid and the lowered government spending needed as a consequence of having those 400,000 jobs that wouldn't otherwise be there if the unemployed had no UI money to spend.

NELP wisely recommends doing more than merely holding the line. An October briefing paper, Time to Re-Invest in the Public Employment Service, proposes spending $1.6 billion on one-stop centers for jobless Americans. These would offer expanded job listings, interviewing an additional 1.5 million workers to set them up with a job-search plan, providing an additional 1.5 million with "high-quality job search assistance"—particularly people likely to exhaust their UI benefits soon—and pre-training counseling for another million.

However, implementing these proposals and extending UI benefits, would be mere palliatives. Not unimportant, to be sure. But they only affect acute problems. What's needed in addition is attention paid, serious attention, to the chronic problems that existed before the Great Recession—and contributed to exacerbating it.

What are some elements of a blueprint for remedying those chronic problems? An industrial plan, a permanent (as opposed to ad hoc) government program that provides classroom and on-the-job training to Americans having trouble finding work, and a focus on the plague of low wages. Mere tinkering in the midst of extended economic pain is inexcusable.

Just passing the palliatives, however, will require a battle given the make-up of the current Congress. Working on those chronic problems will require not just overturning the GOP majority in the House but replacing those Republicans with dependable Democrats. As we know all too well, some don't fit the bill.

Originally posted to Daily Kos Labor on Thu Nov 15, 2012 at 05:55 AM PST.

Also republished by Daily Kos Economics and Daily Kos.

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