Difficult Prospects For Extension On Unemployment

Reviewed: July 28, 2014
By FinanceWeb

Relief For The Long-Term Unemployed

The extension on unemployment compensation has been a serious issue for more than one year, as the expiration date approached and then lapsed. Particularly in areas with high unemployment, the intensity increased after the expiration of the emergency unemployment extension in December 2013. Of the more than 3 million job seekers affected, many have seen their financial and personal situations worsen without the lifeline of income support provided by the federal extension on unemployment compensation. The President has repeatedly asked the Congress for renewal of benefits for this group of economically vulnerable recipients. The Senate passed a bill in April that would have added coverage and paid lost benefits from January1, 2014-June 1, 2014. The House recessed in June without taking action on that Senate Bill.

A Right Or A Privilege

The extension of unemployment benefits expired leaving only the standard 26 weeks of and other state sponsored coverage. Without a detailed treatment of the process, it is sufficient to say that unemployment benefits come from contributions into an insurance system, for which workers pay through payroll deductions. A qualified loss of employment triggers the basic benefits. The Congress enacted the extension in the height of the Great Recession in 2008; it was an effort to help job seekers in a job market thrown into turmoil by a national economic crisis. It extended unemployment benefits beyond the normal period of weeks to as many as 99 weeks. Not based on worker contributions, this federal funding program provided an income for some who had no other source of funds, and who have depleted financial resources.

Does Extension Still Make Sense?

Proponents of a further extension argue that the economy has not yet recovered to the point of absorbing workers who lost employment in the 2008 market collapse. They correctly point out that the Nation has never cut off extended benefits in a time when unemployment stood in the 6% range. Opponents cite the costs of extension and urge the view that job recovery has been adequate to absorb unemployed, that those who wish to find work can do so. There are other generally accepted facts. First, the grant of an extension would benefit the recipients by proving needed income. Second, an extension would stimulate economic growth since the recipients would likely spend rather than save these funds. Many economists noted that the expiration of the extension effectively took billions of dollars out of the economy.

Structural Unemployment

Long-term unemployed face many barriers including the status of being unemployed. Many firms tacitly maintain recruitment practices that eliminate unemployed applicants. Advocates for the long-term unemployed consider this situation as a form of structural unemployment. They cite employer patterns that tend to exclude particular segments of the workforce. The result becomes structural or permanent as the society gradually begins to accept the situation and discontinues special efforts to remedy it.

Popular Support Does Not Translate Into Action

Over the past 18 months, there have been a large number of opinion samplings on the extension of unemployment benefits. With rare exception, the polls indicate broad based public support for extension of benefits. Despite these broad indications of support, the issue has not come to the floor of the House. With Congressional elections later this year, positions have clearly taken a view towards influencing voters.

Opinion Polls Support Extension

Congressional Action