Congress has recently reached a compromise on a measure to extend federal unemployment insurance benefits through the end of the year, which will keep 3.3 million long-term unemployed individuals from losing a critical lifeline. Without the compromise, 166,700 unemployed workers in Illinois would lose their unemployment benefits, which for most is the only way to provide for their families still struggling in the weak economy. Yet, even though the economy has seen recent sustained growth and a slight decline in the overall unemployment rate, long-term unemployment (unemployment lasting for 27 weeks or more) still accounts for 42.5% of all unemployment in the United States. And Congress’ agreement is indeed a compromise between proponents and opponents. The agreement unfortunately also reduces the maximum duration of benefits available in states with high unemployment from 99 weeks to 73 weeks. For the long-term unemployed, the deal is bittersweet.
A report from the Pew Fiscal Analysis Initiative found that the challenge of long-term unemployment is persistent, which makes the extension of federal benefits even more critical. The number of workers who were out of work for at least a year nearly doubled after the official end of the recession—from 16% (2.5 million) to 31.8% (4.4 million) nationally between 2009 and 2011. States typically provide around 26 weeks of regular benefits (though many states provide less or have recently reduced the number of weeks available, as Illinois did by passing legislation last spring that reduced the total number of weeks of benefits available to 25 weeks), but in the current economic climate it often takes the unemployed far longer to find a job. Currently, jobless workers endure an average 40.8 weeks, or nearly 10 months, of job searching. For each new job opening, there are over four unemployed people.
With the odds of getting a job in the current weak economy stacked against the unemployed, federal extended benefits are monumentally important to lending individuals and families an economic lifeline while staying attached to the workforce. The nation saw the labor force participation rate (the proportion of all working-age adults who are either employed or seeking employment) decline to just 64% by the end of 2011, the lowest percentage since 1985. A decrease in the labor force participation rate such as this can in part be attributed to unemployed people giving up on their job searches, which has the net effect of pushing down the official unemployment rate since only those who are actively looking for work are counted as unemployed. The long-term unemployed may be more likely to give up on their job searches and run the risk of dropping out of the labor force completely, as the longer these individuals remain unemployed the more likely they will become “unemployable” because of atrophied work and job search skills, or dispirited by the stigma of being out of work for months or even years on end.
Unemployment insurance not only ensures that unemployed workers and their families can continue living their daily lives and meeting their basic needs, but also stirs much-needed economic activity when recipients spend their benefits at local businesses, which allows local businesses to grow and create jobs. A study by the Labor Department found that, in the depths of the recession, regular, state-funded unemployment benefits boosted employment by 1 million jobs and an additional 750,000 jobs by federal emergency unemployment benefits. The country cannot afford to lose federal unemployment benefits while the economy is still underperforming and the recovery has only begun to regain steam.
Furthermore, policymakers should not lose sight of the purpose of unemployment insurance and how it has historically functioned to benefit the economy. Misguided attacks on unemployment insurance from House Republicans (such as proposals to limit eligibility for benefits, like requiring claimants to have at least a high school diploma or GED or requiring claimants to pass drug tests in order to obtain benefits) played a significant role in the compromise. These proposals were a gross injustice to unemployed workers who lost their jobs through no fault of their own. It is unfair to workers to assume a prevalence of drug use among unemployment insurance claimants when there is no evidence, and furthermore blames unemployed workers for their joblessness in an economic climate created beyond their control.
In fact, current data tell us that the scope of long-term unemployment is widespread across demographic lines, affecting millions of workers regardless of age, education level, and occupation. Thirty-four percent of unemployed workers with a bachelor’s degree in the third quarter of 2011 had been out of work for a year or longer, compared to nearly 38 percent of jobless high school graduates and approximately 39 percent of unemployed workers without a high school diploma. Whether having a certain level of education is required for a job or not, long-term unemployment affects all industries—more than 20% percent of unemployed workers in every industry had been out of work for a year or longer in 2011. What’s more, older workers who have worked hard throughout their lives may be getting hit the hardest—almost half of all unemployed workers older than 55 had been out of work for at least a year in 2011.
The compromise, which also includes an extension of the payroll tax cut, is likely to pass both the House and Senate before Congress goes on recess this weekend, and includes some drug testing provisions on workers who lost their jobs because of refusal to take an employer’s drug test. While these concessions are unfortunate, extending federal unemployment insurance benefits must be accomplished prior to the recess. It is an important step in the right direction towards fixing our economy and putting people back to work. Nonetheless, we have much more work to do, including increasing education and training opportunities for jobless workers, in order to combat long-term unemployment and its ramifications for families and communities.