Nearly 1.2 million unemployed Americans – including 27,000 in Wisconsin – face an imminent cutoff of government unemployment checks if Congress cannot pass emergency legislation to extend federal benefits before funding expires Sunday.
Senate Majority Leader Harry Reid (D-Nevada) pushed this week for Senate passage of a stopgap 30-day extension of jobless benefits, which also includes a 30-day extension of a federal COBRA health insurance subsidy for the jobless. But as of late Thursday, Sen. Jim Bunning (R-Ky.) objected to each attempt to bring the issue to a Senate floor vote, balking that the measure would further inflate the nation’s debt.
The Housepassed a 30-day extension Thursday.
Reid’s 11th-hour actions, however, cut excruciatingly close to the deadline. According to the National Employment Law Project, a research and advocacy group, the ranks of unemployed losing eligibility for unemployment compensation will rise sharply and continuously if Congress decides against an extension. By June, 127,100 Wisconsin residents will see their unemployment insurance phased out if Congress doesn’t act. Nationally, the number swells to 5 million by June, the group calculates.
Behind the legislative frenzy are legions of long-term unemployed.
The economic downturn purged 8.4 million net U.S. jobs since it began in December 2007. By last September, the average duration of unemployment surpassed six months for the first time since the government began tracking that data in 1948 and has continued to rise each month since, according to the Bureau of Labor Statistics.
Figures released Thursday show why the employment problem remains worrisome. First-time claims for unemployment benefits rose 22,000 in the most recent week to a seasonally adjusted 496,000, the Labor Department reported. Analysts had expected the figure to decline.
Using the Obama administration’s job-creation projections, it would take five or six years before the nation reaches the same level of employment that existed in 2007, before the downturn, said Robert Scott, a senior economist at the Economic Policy Institute, a labor-supported nonprofit think tank in Washington, D.C.
The gap between job-seekers and available full-time jobs has reached 25-to-1 in Milwaukee’s inner city and 19-to-1 in Racine, Kenosha and Walworth counties, the Employment and Training Institute at the University of Wisconsin-Milwaukee said.
“Long-term unemployment is unlikely to loosen its grip on our economy anytime soon,” said Christine Owens, executive director of the National Employment Law Project.
Reid calls his proposal for a 30-day extension a short-term fix. A spokeswoman for the senator said he wants to use the monthlong period as political breathing space to legislate a full-year extension of the unemployment insurance and health insurance subsidy.
Before the recession, Wisconsin and many other states mandated that eligible unemployed can receive 26 weeks of unemployment insurance under a state program funded by employer contributions.
The severity of the downturn, however, prompted Congress to add federally funded extensions in a succession of piecemeal steps, starting in June 2008. The effect was to layer tiers of benefits that run for a total of 99 weeks in many states, meaning an unemployed person can move into a new federally funded tier once they exhaust the previous one.
Until last month, Wisconsin qualified for 99 weeks but fell back to 93 weeks after the state fell below an 8.5% three-month rolling average unemployment rate, which was the federal threshold for the final tier of benefits that ran for six weeks.
Either way, the duration of unemployment benefits is unprecedented. While Congress had added benefit extensions in past recessions, they have never run longer than 65 weeks until this recession.
If Congress doesn’t act by Sunday, benefits end for each person after they exhaust their current tier. An unemployed person receiving their 26-week allotment of state compensation will not be able to transfer to federal extensions; anyone in any of the tiers of federal extension cannot move to the next tier of extension.
Some warned that the inability to get a vote before Sunday could cause delays in issuing checks as state agencies struggle to de-program and then re-program an already complicated system.
“Even if there’s a one-day delay next week, and Congress approves the extension by early next week, it’s already too late and there will be a disruption in checks that could impact nearly 30,000 Wisconsinites,” said Judy Conti, a lobbyist in Washington for the National Employment Law Project.
According to the Congressional Budget Office, Reid’s plans for a 12-month extension through the end of December will cost $100 billion. The 30-day extension alone will cost $7 billion.
Congress already is dealing with sticker shock for Washington’s unprecedented spending on programs to stimulate the economy.
Starting a year ago, Congress added a COBRA health insurance subsidy for the jobless. It pays 65% of COBRA costs for eligible employees who were laid off between Sept. 1, 2008, and Dec. 31, 2009. Reid wants to extend that subsidy for all of 2010 as well.
Benefit extensions
In non-recessionary times, eligible Wisconsinites can receive up to 26 weeks of unemployment insurance under a state program funded by employer contributions. Responding to the 2008-’09 downturn, however, Congress added an incremental series of emergency extensions that bring the total to 99 weeks in many states:
July 2008: Congress adds 13 weeks of federally funded unemployment insurance, called Tier 1, for those who exhaust their state limit.
November 2008: Congress enacted a second extension of 13 weeks (Tier 2) to those who exhaust Tier 1. It also added seven weeks to Tier 1, bringing it to 20 weeks.
February 2009: Congress extended funding for Tier 1 and Tier 2 through the end of December 2009; it added $25 to each unemployment check.
June: The Wisconsin Legislature activates a program called “extended benefits” that added another 13 weeks; in addition, it created a new provision called “high extended benefits” that tacked on seven more weeks.
November: Congress creates Tier 3 for 13 weeks and Tier 4 for another six; it also added an additional week to Tier 2.
December: Because none of the federal extensions was funded beyond Dec. 31, Congress rolled them over until the end of February.
January: Wisconsin no longer qualifies for Tier 4 because its average unemployment rate fell below the 8.5% threshold. Maximum eligibility for Wisconsin residents is reduced from 99 weeks to 93 weeks.
