Commentary | Inequality and Poverty

Extend unemployment benefits


Don’t be fooled by the latest report on employment and unemployment. The job market has not turned around. The good news that employment increased by 57,000 jobs was more than offset by the addition of 68,000 to the ranks of the unemployed. And 2.1 million people – one of every four unemployed – have been out of work for 27 weeks or more.

These trends carry one clear message: The 9 million unemployed Americans need a much stronger safety net than the ordinary 26 weeks of unemployment benefits. Before it adjourns, Congress should again extend the Temporary Extended Unemployment Compensation (TEUC) program.

In March, Congress passed the TEUC to keep unemployment checks flowing to jobless workers who had exhausted their benefits without finding work.

But that extension will expire in December. Allowing it to do so would mean real hardship for millions of people.

Extending unemployment benefits again won’t only help avert these hardships, it would also help stimulate the entire economy.

Mark Zandi, an economic forecaster who runs Economy.Com, estimates that, compared to the administration’s dividend tax cuts, extending unemployment benefits would produce about 20 times greater bang for the buck in terms of a positive effect on the U.S. gross domestic product.

For millions of the unemployed, it is literally impossible to find a job. The government’s most recent report on job openings and labor turnover showed that there were fewer than three million available jobs in July at a time when 9.3 million unemployed Americans were looking for work – in other words, three job seekers for every job.

In March 2002, Congress recognized that the job market had not recovered from the 2001 recession and enacted TEUC. The program provides 13 weeks of additional benefits for those who exhaust their regular state unemployment insurance benefits before they find a job, plus seven more weeks in states with the worst unemployment.

The original TEUC expired in December 2002, and Congress only renewed it after a public outcry when benefits were terminated during the Christmas holiday.

TEUC will expire once again, in December, unless Congress acts before it adjourns. The stage seems to have been set to let it die. No money was included in the budget to renew TEUC, no hearings have been held on the need to extend benefits, and Secretary of Labor Elaine Chao has kept a stony silence.

The TEUC program paid out $11 billion in the 2003 fiscal year that ended Sept. 30 and currently costs $900 million a month.

By every measure, jobless workers need the program now even more than in March 2002 when TEUC was enacted. The unemployment rate was 5.7 percent then and is 6.1 percent now. Then, 1.3 million people had been jobless for at least 27 weeks, now it’s 2.1 million. And the number of people jobless for more than 39 weeks but still searching for work has doubled.

The employment situation isn’t likely to improve in any meaningful way in the months ahead. The Congressional Budget Office predicts that unemployment will average 6.2 percent during 2004, a half percentage point higher than the rate in March 2002 when TEUC was first enacted.

Ross Eisenbrey is vice president of the Economic Policy Institute.