CHN: Unhappy Holidays: Congress Lets Unemployment Benefits Expire for 1.3 Million People

The number of people out of work for more than six months rose in November – it was higher than in September or October.  Despite that, House Budget Committee Chair Paul Ryan (R-WI) refused to include the renewal of the Emergency Unemployment Compensation (EUC) program in the Bipartisan Budget Act.  This federally funded unemployment insurance for the long-term jobless who exhaust their state benefits will expire on December 28.  Between Christmas and New Year’s, 1.3 million people will lose benefits, which average $260 per week.  If Congress does not act to re-start the program, another 3.6 million people will lose access to benefits by the end of 2014.
While the House Rules Committee accepted an amendment to prevent a drop in payments for Medicare physicians, the Committee refused to add a renewal of unemployment benefits.  Such an amendment was drafted by Representatives Levin (D-MI) and Van Hollen (D-MD), and moved by the senior Democrat on the Rules Committee, Rep. Slaughter (D-NY).  The motion failed 3-9 on a party line vote.  (All Committee Republicans voted against the amendment; all Democrats voted for it except Rep. Polis (D-CO), who was not present.)

As a result, there was no opportunity for House members to vote on whether to extend Unemployment Compensation for the long-term jobless.  The budget bill passed (see budget article in this issue), and the House went home until January.

Senators who want to renew unemployment benefits are in a tough spot.  Their only option in December would be to reject the budget, forcing further negotiations in January, and making it far more likely that programs like Head Start and rental housing vouchers would not see at least some restoration of the program losses experienced in 2013.

Instead, it is likely that most Democrats will vote in favor of the Bipartisan Budget Act, and will return after the holiday recess to attempt to restore Emergency Unemployment Compensation retroactively.  Such an action is far better than failing to act altogether, but it still leaves long-term jobless people with no income until some point in January.  Most have already exhausted savings and credit, and will have a hard time paying for housing or food.  The abrupt cut-off is a severe hardship for the unemployed, and it is also a blow to the still-fragile economy.  Because millions of people will have little to spend, the economy will lose somewhere between 200,000 – 300,000 jobs by the end of 2014, as estimated by the Congressional Budget Office and the Economic Policy Institute.

The high proportion of jobless people out of work for six months or more is unprecedented this long into an official “recovery.”  Congress has never in the past allowed these unemployment benefits to expire when the proportion of long-term jobless was more than 1.3 percent of the labor force.  Now the proportion is 2.6 percent.

Congress has already acted to reduce the number of weeks of benefits available.  Further, federal unemployment benefits are subject to sequestration budget cuts.  As a consequence, the average weekly benefit dropped in the past year from $290 to $260.  The Bipartisan Budget Act adds funding to undo some of the sequester cuts to appropriations, but unemployment insurance, a mandatory program not exempted from sequestration, will still be subject to annual cuts for the next decade.

Although these benefits have in the past been defined as emergency funding (not needing to be paid for by other cuts or new revenues), this time opposition to continuing the program could well mean that its supporters will need to pay for its continuation.  While there are numerous tax loopholes that could be closed and would easily pay for renewed EUC, most Republicans remain opposed to tax increases unless they are part of an effort to reduce tax rates.

Efforts will be made in Congress to add unemployment benefits to the omnibus spending bill that must pass before January 15.  If those efforts are to succeed, advocates nationwide must keep the needs of the long-term unemployed in the public eye over the holidays and beyond.

Budget and Appropriations
Labor and Employment
Policy Analyses and Research
Poverty and Income
tax policy
unemployment insurance