Nel's New Day

January 6, 2014

Congress Debates Unemployment Benefits

On December 28, 2014, the U.S. economy started losing a billion dollars each week. That was the date when 1.3 million no longer received unemployment benefits because they had been unemployed for over six months, and Congress refused to renew these benefits, an average of $256 per week per person. Within six months, another 1.9 million people may lose these benefits if no action is taken. People receiving these benefits will most likely spend the benefits immediately on services and goods.

This emergency unemployment compensation was first passed in 2008 when the unemployment rate was 5.6 percent and the average duration of unemployment was 17.1 weeks. Five years after George W. Bush signed the bill the rate is 7 percent, and the duration is 36 weeks. With the expiration of the law, unemployed people can collect benefits for only a maximum 26 weeks.

A bill to renew the emergency benefits was introduced by Sens. Jack Reed (D-RI) and Dean Heller (R-NV)—two states with the highest unemployment rate—and the Senate has determined it a priority, beginning today. Because of the severe weather, Senate Majority Leader postponed the vote until tomorrow when he hopes to have the necessary 60 votes.

The following map shows the likelihood of people losing benefits in each state until benefits are renewed. The darker the shading, the greater percentage of the population losing the benefits.

Unemployment map

Every state but one—North Dakota—has added more people than jobs since the recession began, totalling 9.2 million jobs for the country. In 33 states, the difference between jobs and population is 5 percent or more. New Jersey takes the biggest hit with 1 percent of the state population losing benefits.

Eligibility and benefits are determined at the state level, meaning that unemployment benefits vary across the nation. This map shows the differences among different states:

Unemployment benefits by stateThe GOP members have several off-the-wall opinions of why they want to eliminate benefits. Some of them want to “get back to normal,” even though the fire of the recession has not been put out yet. They think that the country can be “normal” if they pretend it is. Sen. Rand Paul (R-KY) pretends that he is trying to get the unemployed back to work because employers discriminate against those who have been out of work for the longest times.

Paul's job advice

Paul has also been insulting to the unemployed by stating that they are unwilling to take lower-paid jobs below their skill level. The senator fails to understand that employers don’t want to hire well-educated people for jobs that don’t require this level of education because they think that the workers will leave as soon as they get a better job. Those who are unemployed for a longer period are also discriminated against because employers think that they don’t want a job or have lost their skills.

GOP theories of keeping the unemployed from having benefits are all debunked by legislative actions in North Carolina. Because this state cut off unemployment benefits earlier than any other state, North Carolina has shown that the result is a shrinking labor force. The unemployed have stopped looking for jobs because they don’t exist. Congress wants to do the same thing.

Congress hides unemployed

Paul used economist Rand Ghayad to prove his point, and Ghayad responded. “Paul cites my work on long-term unemployment as a justification – which surprised me, because it implies the opposite of what he says it does.” The economist further explained that good policy “requires more than a cursory or selective reading of the research.”

Ghayad writes in The Atlantic, “But just because companies discriminate against the long-term unemployed doesn’t mean long-term benefits are to blame. Paul might know that if he read beyond the first line of my paper’s abstract.” Again the economist’s explanation is the same as any reasonable thought, that only if people stopped looking for jobs would cutting benefits drop the unemployment rate. It might hide problems with the labor market, but it won’t cure them. The article concludes:

“A careful reading reveals we can be both hard-headed and warm-hearted in this holiday season.”

The tragedy of unemployment is the large number of people looking for jobs. Each single job averages three job seekers, and the number is much higher in cities. When two new Wal-Marts opened in Washington, D.C. last month, other 23,000 people applied for fewer than 600 jobs—about 40 job seekers per job. The elite GOP in Congress exhort the unemployed to look for lower-paying jobs: that’s what they’re doing at Wal-Mart.

The very people blaming people for unemployment are the ones who caused the problem. Eight months ago, the New York Times reported on how the Congressional austerity measures—those promoted by GOP lawmakers—have kept the unemployment rate from dropping another point. Without the austerity measures, the economic growth would also have most likely grown two additional points in the previous year. This information comes from both private sector and government economists. “Immediate deficit reduction is a drag on full economic recovery.”

The focus of GOP members of Congress was deficit reduction, and they succeeded. The deficit is shrinking faster than at any other time in the past 60 years. At the same time, however, the economy has not grown enough to provide sufficient employment. Spending cuts have reduced demand and taken capital out of the economy while people who could increase demand lost money through payroll tax increases when the breaks were eliminated.  Solutions for unemployment: stop the sequestration cuts, invest in infrastructure, and extend federal aid to prevent the growing public-sector layoff.

When the GOP blocked the president’s American Jobs Act, they also blocked over one million jobs. Sequestration wiped out another 700,000 potential jobs. If the GOP had passed the jobs act and not the sequestration, 15 percent of the unemployed might now have jobs, lowering the unemployment rate below 6 percent.

Almost two months ago, Rep. Eric Cantor (R-VA) distributed the House GOP agenda for 2014—a blank sheet of paper. We can be pretty sure that they will continue with their historic approach of avoidance and obstructionism.

1 Comment »

  1. Need. To. Undo. This. Fast!


    Comment by Lee Lynch — January 6, 2014 @ 10:13 PM | Reply

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