The Lame Duck Congress needs to get to work for those who can’t find work, passing a year-long extension of federal unemployment insurance benefits. It’s a critical support for families on the financial edge, and it’s a critical support to the economic recovery.
Unless Congress acts by November 30, unemployed Minnesotans will qualify for a maximum of 39 weeks of unemployment benefits instead of the current 86 weeks, more than a 50 percent drop. This would happen as people still struggle to find work, and before the economy has fully recovered. Roughly 2 million people nationally would be impacted starting in December, according to the National Employment Law Project (NELP). Some would face a loss of benefits that month, others would see their weeks of eligibility shortened, leaving them “out in the cold for the holidays,” notes NELP.
Here is how unemployment benefits work in Minnesota. In normal times, people who lose their jobs can qualify for up to 26 weeks of unemployment benefits. When unemployment reaches a certain level it triggers “extended benefits,” an additional 13 weeks, bringing the total to 39 weeks. In 2008 and 2009, as more and more people lost jobs, the federal government started paying for additional weeks of “emergency benefits.” The length of these benefits varies, depending on the state’s unemployment rate. In Minnesota, emergency benefits add 47 weeks, bringing the total to a maximum of 86 weeks.
If the federal emergency unemployment benefits end, the Minnesota impact would be delayed. (The benefits of last resort are the 13 weeks of the extended benefits, so those are still available after the emergency benefits end.) The St. Paul Pioneer Press offers a compelling story of a woman who faces an early end to her benefits, and explains how the system works at a personal level.
In broader terms, here’s why keeping the additional weeks of benefits is both important and doable.
Extending federal benefits makes economic sense. Failing to extend benefits would put people near the financial edge over the edge, adding to the suffering of those who want to work but can’t find a job. Also, unemployed workers spend their unemployment benefits right away, spurring the recovery. The Congressional Budget Office said increasing aid to unemployed workers would create a bigger economic boost than reducing payroll taxes, infrastructure investments, or any of the other 10 options it analyzed.
There aren’t enough jobs yet. In Minnesota and the rest of the nation, job seekers still outnumber job openings. In Minnesota, there is roughly one opening for every five people looking for work, according to a September analysis by the JOBS NOW Coalition. Many of those jobs are part-time. “Job seekers outnumber full-time job openings by 8-to-1,” JOBS NOW found.
Even with the extension, many Minnesotans are running out of benefits before they find work, 1,000 a week according to Minnesota Unemployment Insurance.
It’s unprecedented to cut unemployment benefits at this point in a recovery. In September, the nation’s seasonally-adjusted unemployment rate was 9.6 percent. “Since the unemployment insurance program was created in response to the Great Depression, Congress has never cut federally-funded jobless benefits when unemployment was this high for this long, (at over nine percent for 17 consecutive months),” NELP said.
We have the money to pay for it. Some Congressional leaders would increase the deficit by billions of dollars by extending the 2001 and 2003 tax cuts for millionaires. Congress should let those tax cuts expire and instead put that money to a higher priority use – and one with a greater economic impact.
For additional information, see the Center on Budget and Policy Priorities’ recently-released paper Emergency Unemployment Insurance Benefits Remain Critical for the Economy and Economic Policy Institute’s What Would You Do With $67 Billion?
-Scott Russell & Steve Francisco
While your argument is compelling, yet I wonder would Minnesota be included ? My understanding is that Federal dollars would go to states with unemployment over 7.5% and with Minnesota unemployment below that, we may not get any monies. One suggestion for Congress would be to look at regional areas instead of states … as such, if Duluth has a high unemployment rate, they would qualify for funding even though the overall state may be below the threshold.
Extending unemployment benefits makes sense if it is done through legislation like S. 3706 – Americans Want to Work Act.
S. 3706 includes tax cuts for business to encourage hiring as it would extend for one year the HIRE Act payroll tax credit for businesses hiring those unemployed for over 60 days … plus it doubles the credit amount to $2,000 for businesses hiring those who have exhausted their UI eligibility.
Giving incentives to business may encourage new hiring … in Minnesota, I am concerned about the “payback” on State Unemployment Tax. Businesses that laid off employees now are seeing the increased taxes (as they payback into the state fund) … that makes businesses re-evaluate whether to re-hire versus offering more overtime. Minnesota should cap the SUT rates to no more than what was paid in 2007 for the next two years and then start the “payback” in 2013.