Boushey: An Unemployed American Should Not Be a Political Football
Unemployed American workers enter the second half of this year with little or no assistance from Congress in coping with the continuing ravages of the Great Recession. The conservatives in Congress who are blocking efforts to extend unemployment benefits to those out of work and searching for a job for at least six months are largely the same ones who enabled the Bush administration to drive our economy off a cliff but who now vote to hurt those still suffering from the economy’s free fall.
[IMGCAP(1)]With almost half of all unemployed workers among these long-term unemployed, the inability of Congress to override the objectives of these culpable conservatives is downright irresponsible. The extension of unemployment benefits that expired June 4 provided between 34 weeks and 53 weeks of extra benefits. If these benefits are not restored by the end of July, the Department of Labor estimates that 3.2 million unemployed workers will lose their benefits.
But the irresponsibility is deeper than most people realize. The biggest problem right now is that Congress is mired in this debate at all. Unemployment benefits should respond to economic conditions, not political shenanigans. These benefits help unemployed workers and their families cope with abruptly lost incomes until they can find a new job while also aiding the economic recovery by helping families maintain spending in their communities, which in turn preserves jobs for employed Americans.
Unemployment benefits are a simple economic policy. It’s easy to determine when they are most needed — when the unemployment rate rises and remains high — and when they should end — when the economy is in no danger of slipping back into recession. There is no reason to require an act of Congress to extend them.
Extending unemployment benefits should not be a political football, but what’s so appalling about the spectacle in Congress recently is that the game only begins when the economy is in dire straits. In normal economic times, politics plays no role in how effective the program is at meeting its goals. Most of the time, unemployment benefits are available for a reasonably long-enough period of time for workers to make a transition into a new job. States provide up to 26 weeks of benefits to unemployed workers who meet the program’s qualifications. When the unemployment rate is 4 percent to 6 percent, as it was, for example, from 2004 to mid-2008, six months is long enough for most people to find a new job or transition into school or other activities.
But when unemployment rises, 26 weeks is very often not a reasonable length of time to find a new job. Today, with nearly five workers for every job opening available, unemployment hovering near 10 percent and nearly half of those unemployed having been out of work for at least six months, 26 weeks of unemployment benefits simply aren’t enough.
Yet, it’s exactly — and only — in these tough economic times that the law requires Congress to act to extend unemployment benefits. This is the worst kind of policy design imaginable. When jobs are scarce, money tight, tempers short and political gamesmanship most appealing, the unemployed are forced to wait for Congress to act to extend benefits — benefits that we have an adequate policy for in good economic times. It makes no sense. We should have a system of unemployment benefits that responds to high unemployment.
The states have a program called Extended Benefits that is usually funded 50-50 between the states and the federal government. This program provides 12 weeks to 20 weeks of extra benefits, above and beyond that initial 26 weeks, in states where unemployment has risen sharply. Yet the triggers that turn the Extended Benefits program on and off don’t work. They “trigger on” too late (when too many unemployed workers are already long-term unemployed) and, most importantly, they “trigger off” too early — usually long before state economies have seen their unemployment rate return to normal.
The American Recovery and Reinvestment Act of 2009 aimed to address this problem with a short-term patch that provided full federal funding to help states meet the cost of this program. But there’s an ugly underside to this: 27 states took up the option to have the program tied to the Congressional extensions. So when Congress let the program expire, these states’ programs turned off as well. Now, only 11 states provide 13 weeks to 20 weeks of extra benefits.
Congress still has time to fix the problem. It could implement a new state-level trigger that is tied to the state’s unemployment rate. When unemployment is high or rising, extra weeks of benefits automatically trigger on. When the unemployment rate falls back to normal, the extra weeks trigger off. It’s easy. And, as Jeffrey Wenger and I showed in a recent paper, it works.
Take Nevada: If the triggers that we propose had been in place over the 2000s, Nevada’s extended benefits would have triggered on in September 2007 and would not yet have triggered off. And we estimate that the cost of implementing automatic triggers would be no more than implementing Congressional extensions. The program could be fully funded through the federal portion of the unemployment insurance tax so that, in the future, we don’t need to deficit-finance nationwide extensions.
One way to start would be to implement sane, state-level triggers tied to state unemployment to turn off the next round of emergency unemployment benefits — if Congress can agree to implement those. This would put an end to the politicized haggling and make sure that the unemployment insurance system can do what it was designed to do: help the unemployed and boost spending in tough economic times. Surely conservatives would find it hard to object to a unemployment benefits formula tied to their own states’ economic realities.
Heather Boushey is senior economist at the Center for American Progress.