Our economy is facing a long-term unemployment crisis, which new evidence suggests is made worse by the five-month expiration of federal unemployment benefits.
The president has not given up and Speaker John A. Boehner hasn’t closed the door. They and Congress owe it to three million unemployed workers and their families, the health of the economy and the future of the workforce to find a way to re-start the federal emergency unemployment insurance program.
Our government has never terminated unemployment benefits when a full 35 percent of the unemployed have been out of work for six months or more.
It’s cruel. Hardworking Americans desperately seeking new jobs have exhausted their savings, seen their homes foreclosed on, let bills go unpaid, and run out of money needed to just put gas in their cars to go on an interview.
It’s also short-sighted — for the economy, for the long-term career prospects of these workers, and for the American workforce. As a result of allowing unemployment benefits to expire, nearly $5 billion was pulled out of our economy during the first quarter of 2014 — money that would have been spent on food, clothes, gas and other essentials by the long-term unemployed. The Congressional Budget Office estimates this will cost our economy 200,000 jobs this year.
Sadly, older workers are bearing the biggest burden. Older unemployed workers already tend to leave age related information off their resumes, and research shows that employers are also less likely to call the long-term unemployed for an interview. According to AARP, unemployed individuals 55 and over have been out of work for nearly a year. This duration actually increased last year despite improvements in the overall economy.
One of the greatest threats our fragile economic recovery faces is that unemployed workers will permanently leave the labor force, hurting the economy for years to come.
Here is where unemployment insurance comes in. A new study by Alan Krueger and two colleagues at Princeton University found that even in a strong economy, the long-term unemployed face formidable challenges finding full-time, steady jobs. They become discouraged more quickly than the short-term unemployed and stop looking for work. That’s why Dr. Krueger concludes that an underappreciated, but vital reason to extend unemployment benefits in the current economic environment is that it helps keep long-term unemployed workers actively looking for a job. Keeping them in the labor force can — in the long run — boost employment and the size of the economy.
If benefits are not extended, it is more likely that long-term unemployed workers will give up looking for work or seek assistance through other government programs, which will harm the economy over the long term, Krueger found. With efforts to reauthorize the Workforce Investment Act coming to a conclusion, we need more than ever to keep people in the workforce.
We can prevent these consequences. Taking the speaker at his word, he made three prerequisites to supporting an extension of unemployment insurance. From this point forward, we can easily satisfy his demands.
The speaker called for the extension to be paid for. Even though most economists agree that unemployment insurance is a stimulus because money flows right back into the economy, the bipartisan Senate legislation included offsets and those remain available to re-start the federal unemployment benefits program.
The speaker questioned the state’s ability to implement the program retroactively. We can re-start the unemployment insurance program through the end of the year, maintaining an individual’s weeks of eligibility but providing benefits and evaluating job search efforts going forward.
The speaker wanted unemployment benefits tied to job creation. Two pieces of jobs legislation are pending action by Congress. There is a package of tax provisions impacting business and individuals that expired at the end of last year which need to be extended. And the Highway Trust fund is going to run out of necessary funds this summer. Unless Congress acts, more than 100,000 transportation projects could be delayed, and as many as 700,000 construction jobs could be put at risk. We should include a six-month extension of unemployment insurance alongside either of these legislative packages.
That’s what the American people would call a win-win solution.
Rep. Sander M. Levin is a Democrat from Michigan and serves as ranking member on the Ways and Means Committee.