By Erika Eichelberger
On December 28, 1.3 million people will lose their unemployment insurance. That’s because Congress failed to add an extension of those benefits into the budget deal that will likely pass the Senate this week. Here is some background:
Who is losing unemployment benefits? The long-term unemployed. After state unemployment benefits run out—usually after 26 weeks—federal emergency unemployment benefits kick in for up to another 47 weeks. Since Congress didn’t renew the program, 1.3 million Americans will be kicked off benefits, which average $1,166 per month. By the end of 2014, another 3.6 million will lose their benefits.
Why are they called emergency benefits? In 2008, under President George W. Bush, Congress authorized emergency unemployment compensation to help the jobless cope with the recession, giving workers a total of 59 weeks of unemployment compensation. A year later, President Barack Obama signed a law giving the unemployed 14 more weeks of jobless benefits. At the height of the recession, Americans could get up to 99 weeks of unemployment pay. That number has since dipped to a maximum of 73 weeks. This is the first time since 2008 that Congress hasn’t extended the program.
Under another federal program initiated by President Richard Nixon, Americans can still get an extra 13 weeks of benefits if the unemployment rate in their state is high enough. (This threshold varies by state).
The recovery is picking up pace. Is it time to end the program? Many Republicans think so. Sen. Rand Paul (R-Ky.) said last week that he thinks extending the benefits fosters unemployment. “I do support unemployment benefits for the 26 weeks that they’re paid for. If you extend it beyond that, you do a disservice to these workers,” Paul told Fox News. “When you allow people to be on unemployment insurance for 99 weeks [sic], you’re causing them to become part of this perpetual unemployed group in our economy.”
The long-term unemployment rate—the percentage of those without a job for 27 weeks or longer—remains at record levels, though, in an economy with three job applicants for every job opening. The overall jobless rate has dropped to its lowest in five years, but the long-term unemployment rate is at 37 percent of the total unemployed.
In past recessions, extended unemployment benefits ended when the long-term unemployed represented about 1.3 percent of the workforce. Today, the long-term jobless represent more than 2 percent of the labor force.