Relief for the millions of Americans out of work could be on the way on today, after more than a month of maneuvering in Congress. Federal extensions for unemployment insurance expired on June 2, and have been shot down in three votes since then by Republican lawmakers who say more extensions for the jobless will add to the federal deficit. During that time, an estimated 1.3 million Americans have run out of benefits, out of some 14.6 million unemployed.
The new authorization for extensions is expected to pass today, as it will be taken after the swearing in of Democrat Carte Goodwin, who’ll replace the late West Virginian Sen. Robert Byrd and give the party the 60 votes they need to win.
For many people, it won’t be a moment too soon. Congress has turned jobless benefits into a partisan issue before, even earlier this year, but this time seems to have inspired far more anxiety than before. As Laura Bassett reported one personal story at Huffington Post earlier this month:
Debra Rousey of Gainesville, Georgia, says that she received an unemployment check of $194 last week, half the usual amount she receives, along with a letter announcing that this check would be her last. She is now in a complete panic over what to do next. "I'm desperate and devastated," she told HuffPost. "I didn't get any warning. I was barely making ends meet on $330 a week, trying to diaper my grandchild and put food on the table for the four people I support. What do I do now? How am I going to make rent next month? I keep thinking, 'If I end up in a cardboard box, can I find one big enough for everybody, or do I have to send my son to live with someone else?'"
It appears that relief is set to arrive. Perhaps the bigger news now is that White House is looking toward the end of the year — and seeing more extensions in our future.
The legislation is expected to pass, but a slow economic recovery suggests jobless benefits will need to be extended again in November. The unemployment rate is 9.5% and the number of people out of work is about 14.6 million. "I think it's fair and safe to assume that we're not going to wake up at the end of November and find ourselves at a rate of employment that one would consider not to be still in an emergency," [White House Press Secretary Robert] Gibbs said at a White House briefing with reporters.
But can these extensions of unemployment benefits go on forever? Certainly many unemployed workers will be counting on them for some time to come. But Derek Thompson of the Atlantic argues that with high employment projected through at least the next two years (see chart above), there will come a point when the unpopular decision to cut end benefit extensions does indeed need to be made.
There are no obvious cut-off points. It doesn't make a lot of sense to say, for example, that once the job-openings/unemployed ratio sinks below 4.5 (now it's at 5) we immediately cancel the extended benefits program. At some point, however, unemployment benefits will discourage workers from seeking real job openings. For now, the San Francisco Fed estimates that UI artificially inflates the unemployment rate by about 0.4%. But in a healthy economy, Paul Krugman has acknowledged that especially generous or long benefits are a disincentive to work, as we've seen in Europe.
So when extensions finally are cut off, what then? The Christian Science Monitor just came up with an article that lays out six alternate ideas for improving Americans’ economic situation. These include such action items as taming the deficit, clarifying tax policy and creating a long-term growth strategy, but really only half of the suggestions would do much to help unemployed workers out in the same way that benefits do. One of these ideas is to provide more aid to states, another is having the Fed buy more securities and promote lending, but the truly intriguing one is this:
Incentivize hiring: Obama continues to sell the so-called HIRE tax credits for firms that employ people who lost jobs during the recession. Mr. Charlton in Pittsburgh, whose online business is called the Resumator, says more should be done along this line and to help start-up firms get seed money. (He hopes to hire a couple of people, but his young firm is in what he calls "survival mode.") Some economists have called for a payroll-tax holiday on new hires, or for tax breaks on business investment in equipment and research.
Without economic recovery, however, it seems unlikely that jobless Americans will be much in the mood for experimention — or expired benefits.