Democrats, and even some Republicans, are going to try to extend emergency unemployment benefits during the lame-duck session in November and in the 114th Congress that starts in January. But with long-term unemployment falling rapidly, it may be too late.
Congress allowed emergency benefits for workers unemployed for longer than 26 weeks to expire in December, despite Democrats’ efforts to extend the program for another year. Reinstating benefits was at the top of the agenda for the Obama administration and the Democratic Senate through the early part of the year, but was blocked by the GOP-controlled House.
Now the unexpected improvement in the labor market has lowered the prospects for legislation, even though proponents still think reinstating benefits would help the broader economy as well as the out-of-luck workers themselves.
“Congressional Republicans have continuously blocked unemployment benefits for millions of long-term unemployed — benefits that would help these Americans continue to look for work and remain in the labor force,” said Rep. Sander Levin of Michigan, the ranking Democrat on the House Ways and Means Committee who has led the effort to re-up extended unemployment insurance.
Knocking House Speaker John Boehner for offhandedly suggesting in a speech Thursday that the unemployed would “rather just sit around” instead of working, Levin said, “This is an insult to the millions of Americans who lost their jobs through no fault of their own and who actively search for work every day. We will continue to press Republicans to end their obstruction and allow an up-or-down vote on unemployment insurance.”
Rep. Frank LoBiondo, a New Jersey Republican who has worked since December to renew unemployment insurance, “will look to options in the lame duck or early next Congress to again advocate for its passage,” said a spokesman.
But the unemployment rate has tumbled from 6.7 percent in December to 6.1 percent in August, and most of that drop is because of falling long-term unemployment, White House economists recently noted.
The number of long-term unemployed has dropped from 3.88 million to 2.96 million, roughly a 25 percent decline. The long-term unemployed have gone from roughly 40 percent of the unemployed to under a third.
With government and private-sector economists expecting the economy to continue to grow and create jobs, the pressure to reinstate the benefits, and to find ways to pay for them, has waned. Although the Obama administration is still working with CEOs to promote the hiring of long-term unemployed workers, some of whom face discrimination from employers, the White House didn’t include a call for re-upping the benefits in its statements on the five-year anniversary of the financial crisis.
“In December, it was an open-and-shut case as far as the economics were concerned,” said Michael Strain, an economist at the right-of-center American Enterprise Institute who then advocated continuing the program. “At this point, it’s a much harder call to make,” he added.
“Things are changing so rapidly in the labor market that I would need to wait until November until making a call,” Strain said, noting that the earliest Congress could act would be after the midterm elections in November.
In previous recessions, Congress cut off the emergency long-term unemployment when the long-term unemployment rate was 1.3 percent or lower — that is, when those out of work for longer than 26 weeks made up 1.3 percent of the labor force. In December, the rate was twice that. In August it was 1.9 percent, and it might be near 1.3 percent by the time Congress returns, Strain noted.
But with the Federal Reserve and Congressional Budget Office saying that the labor market still has some slack, there’s a strong case for extending the benefits, said Chad Stone, the chief economist at the left-of-center Center for Budget and Policy Priorities. Retroactively passing an extension and giving unemployed workers checks for almost a year of benefits they missed would stimulate the economy by creating extra consumer spending.
“It would have been stimulus spending if they’d received it continuously,” Stone said, “and certainly if they’d gotten the money that they’d lost that would have been a boost.” He added, though, that “realistically it’s hard to see what vehicle would be used to do it or what appetite there is in the House to do it.”
Gordon Gray, fiscal policy director for the conservative American Action Forum, argued that the past nine months have vindicated the decision not to renew the benefits. “We should acknowledge the fact that we’re past the worst part of the recession and try to move away from countercyclical policy and band aids,” he told the Washington Examiner. “This is what happens when you come out of a recession. The sky didn’t fall, and I don’t see any appetite for [renewing benefits] on the Hill.”
