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Should the Emergency Unemployment Program be Extended?

Updated on December 13, 2014

What is EUC?

I don’t typically choose to write about political issues, but wanted to learn more about this particular issue as I know several individuals that will are directly affected by the impending loss of Emergency Unemployment Compensation. Many people rely on this program to simply to put food on the table. This program was created June 30, 2008 and has since been modified several times. Most recently the American Taxpayer Relief Act of 2012 extended the expiration date of the program to January 1, 2014.

Long-Term Unemployment

As of November, 2013 more than 4 million Americans hadn't worked in more than six months. After 6 months individuals are no longer able to receive benefits from their state, so rely on the federal extended benefits. These benefits are now coming to an abrupt end at the end of this year. This means many people still out of work will no longer have any type of income coming in at all. Those individuals barely getting by on small weekly unemployment pay will now have nothing.

The long-term unemployment situation doesn't seem to merit this cut. While the overall rate might have fallen slightly, the long-term unemployment rate still remains high at around 35 to 40 percent of the total unemployed. The average unemployed worker has been looking for work for more than 37 weeks. Cutting the longer term benefits will not reduce this rate. Sustained economic growth is needed to reduce long-term joblessness.

It is a well-known fact that those who have been unemployed for longer periods of time have a tougher time finding work, then those recently unemployed. But sustained economic growth will create additional demand for jobs and companies will again begin to hire at a faster rate. Starting with those recently unemployed and moving on to those who have been out of the workforce longer. Seems simple, but nevertheless, long-term unemployment is definitely a real problem in this economy.

US State Unemployment Rates

What is the Problem?

I don’t believe the problem is that people aren’t looking for work. Nearly one in three adults without a job has spent more than a year looking. Many people feel that extending the benefits will lead people to want to keep receiving benefits rather than work. Basically being “paid to be unemployed”. I don’t believe this to be the case at all. Consider any professional, such as myself working for a financial services company, earning a decent salary of around $80,000 per year. Layoffs and job loss hit this industry as well. Now that individual is out of work, looking for another position to utilize their skills in an industry still letting people go. They apply for unemployment benefits to ensure they can continue to pay their mortgage and feed their children. The maximum benefit in my state of Colorado is $513.00 per week. This averages out to $26,676.00 per year. That is a very significant drop in pay! I don’t envision very many individuals that would prefer to stay at home receiving less than 1/3 of what they are used to receiving.

What is the Answer?

Nevertheless history and statistics show that extending unemployment benefits does actually increase the length of unemployment. Research form Henry Faber of Princeton University and Robert Valletta of the San Francisco Fed shows that paying extended benefits increased the unemployment rate. They also found that paying the benefits for an extended time has a bad effect on long-term unemployment. Their research discovered that paying the long-term benefits caused the rate to be one-quarter higher than it would have been without the benefits. Basically they discovered that up to one million people were out of work for more than six months because they were receiving benefits.

However even with all the research and studies done, the great recession of 2009-2012 was much worse than a typical economic recession. Unemployment rates rose significantly higher than in previous recessions. In addition Gross Domestic Product also fell sharply. Thereby with economic demand so much weaker than typical, workers have had a much harder time finding work than in prior recessions. Despite the extension of long-term benefits, the number of those that hadn’t worked in more than 6 months has fallen slightly in the last year. So essentially some of the long-term unemployed are finding jobs, which is good news. However it isn’t clear if long-term unemployment would have fallen if the benefits hadn’t been extended.

At this point it seems that the US will now test whether American workers need to go through the short-term pain of losing unemployment compensation to benefit from the long-term gains of getting a job. That is what we are looking at if the benefits abruptly stop in the next couple of weeks. I just don’t believe that is the right course of action.

Does Anyone Really Have an Answer?

This is such a difficult situation we are in. I don’t think anyone really has the answer. But I do believe we are headed for trouble by eliminating this program. There are so many other programs that are truly being abused and continue to remain funded. These are the programs that truly need to be reevaluated. Before the creation of unemployment benefits, along with other social safety net programs, there was even more poverty then we see today. These programs were fought hard for and took decades to establish a decent standard of living, which is an integral part of our civilization.

In addition, I don’t feel it is in any way fair to discriminate against those out of the workforce for longer periods of time. I don’t think this makes them unemployable. Simply not working doesn't reduce a person’s skills or knowledge. It’s more likely that someone with no income whatsoever, with the loss of benefits, is likely to become homeless or destitute and therefor permanently harmed or disabled in some way. Then we are looking at an entire different circumstance of problems. Creating more homeless is not going to aid in the growth of our economy. Unemployment benefits are not about getting paid to stay home, they are about preventing homelessness.

It is the underlying problems that must be resolved. The USA must begin to take care of itself first and create real jobs for it’s citizens. This will in addition limit the demand for low paying jobs by limiting the supply of those willing to take those jobs. At this point there are simply way too many takers for any type of job at all and not enough to go around. There are so many educated and highly skilled looking for work that won’t even be considered for the lower paying jobs. It’s not a case of not wanting to work, these individuals can’t even seem to get in the door. In addition, It is also apparent that discrimination against those unemployed for longer periods must stop. But all in all, cutting off this means of helping people survive while continually looking for employment is sure to lead to catastrophe in my opinion.

What do you think?

Should Congress extend emergency unemployment compensation for the long-term unemployed?

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    • Leslie Ramos profile image
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      Leslie Ramos 2 years ago from Denver, Colorado

      Thank you Rachel for your comment. I agree it is so frustrating to see that NOTHING is happening! No amount of pity will help those struggling to survive!

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      Rachael 2 years ago

      Will -- here's the difference. There are idened 12,673,000 who do not have jobs. But they are still counted as being I the labor force because they are looking/collecting unemployment while they do so.There are an additional 87,897,000 (I don't know where they got that figure but it's not the first time or place I've seen it) who are not looking (for whatever reason) and are therefore not counted in the labor force.For a total of 100,570,000 who don't have a job.But of that 100+m 12.6m are still considered part of the labor force even though they don't have a job.And then folks wonder why they can't get a reliable number but hey, this is the government, and it was going on long before Chicago Jesus came along.Now, as for the last part of your equation up there don't forget of the 66% of the population that doesn't work and isn't part of the other demographics a big chunk is retired or too young to work.Still, the issue remains that ther are 12.5m "officially" unemployed and 3.7m jobs to go around.Which is a little worse than 1 job for every three that are counted out there (and an even worse ratio if we count the ones the gov't won't).So when the numbnuts on eeVee start running on about how they pity all these poor out of work people how terrible for them and their families let's cut off their unemployment so they go out and get a job. . .where the hell are those other 2 unemployed supposed to get a job and what are they and their families supposed to live on until they do?(yeah, I know, I'm repeating my rant but Hannity Bolling and Stein really pissed me off this weekend. (And that dipshit broad Andrea Tantaros, too.) Among others.

    • Leslie Ramos profile image
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      Leslie Ramos 3 years ago from Denver, Colorado

      I agree, people use those dollars as a lifeline to buy food and other basic necessities. Thereby putting those dollars back into the economy. It looks like the vote passed the first hurdle, will see if it goes forward.

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      Ed 3 years ago

      It is a proven fact that unemployment dollars go right back into the economy - food, housing, transportation. As do food stamps, medicaid and disability. All meant for survival not luxuries - hope this passes for all involved sooner rather than later!

    • lisavanvorst profile image

      Lisa VanVorst 3 years ago from New Jersey

      As soon as I hear congress has approved the extensions I will go down to the unemployment office here in New Jersey. Thank You for your kind words and support.

    • Leslie Ramos profile image
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      Leslie Ramos 3 years ago from Denver, Colorado

      Thank you for your comment. I am sorry that you are having such a difficult time finding employment. I was surprised to hear that yours was cut off already. You should have continued on through the tiers until the end. If they approve an extension, will you be eligible to continue receiving benefits? But yes it will definitely cost the government millions to continue with the benefits, but I think the costs and devastation will be much greater but shutting them off completely.

    • lisavanvorst profile image

      Lisa VanVorst 3 years ago from New Jersey

      I have been unemployed for 18 months. I have been on numerous interviews and continue to search every internet site every day. I hate being home and want to get back into my field that is healthcare. I lost my unemployment benefits in October which I can't understand why because I did not even go through the four tiers. The government cannot just stop and leave millions of people with no income. It is wrong. Your article is very correct. Sure it will cost millions of dollars to continue these benefits, but what is the choice. Should we all go on TANF, Medicaid or Food Stamps? Doesn't that cost tax payers? We want to work. Yes the longer we are out of work the harder it gets. I have a certification and two college degrees in my field. I want to work, but cutting millions of individuals off isn't the answer. Great Article.

    • Leslie Ramos profile image
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      Leslie Ramos 3 years ago from Denver, Colorado

      Your right, it was put in front of them before the holiday season, but nothing happened.... of course. At least they can enjoy their holiday, without the worry of soon becoming homeless!! No consideration for the millions too scared to enjoy anything!

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      Ed 3 years ago

      This should have passed before Congress went on "holiday", but as usual they wait until the next session. 70% of working Americans are "underemployed" or working two part time jobs to survive because of the hiring practices since the Great Recession. Make your voice heard!

    • Ted Gardner profile image

      Ted Gardner 3 years ago from Denver, Colorado

      Very well written and this is going to impact so many people. I do not think they know how bad this could get if not extended.......