Congress isn’t listening: Unemployment Benefits and Jobs

Posted on 11/23/2010 @ 10:30 AM

Tags: Budget, Government Affairs

On Thursday, Nov. 18th, Congress failed to answer the American people on the most significant demand that they made less than 16 days earlier on the elections – “more jobs.” Now, on the 30th of November, it’s the American economy and livelihoods on the line: 2 million people may loose access to their unemployment benefits. Without money to spend on bills, expenses, and Christmas presents this holiday season, guess what’s not going to happen. Certainly not “more jobs.” And that’s not saying anything about what’s going to happen to the people who need those benefits every day.

The Basics:

On Thursday Congress did not pass an extension of unemployment insurance (UI) benefits, which failed in the House of Representatives by 17 votes (258-154) because it needed a two-thirds majority. In an effort to pass as much legislation as possible in the Lame Duck session, House Democrats placed the bill on the suspension calendar, which required the two-thirds vote.

The UI benefits that exist now have been extended seven times – in fact Congress has never before failed to extend emergency unemployment benefits when the unemployment rate was over 7.2%. Guess what the unemployment rate is now. Almost 9.6.

The UI benefits that will expire on November 30th would have been a good idea for two main reasons. First, those benefits may be the only income a family has – it literally being their ‘lifeline.’ For some, the weekly assistance they receive is not enough to cover all the bills that they have, but it helps. And second, when these families receive the benefits every week, that money doesn’t end up in savings accounts – people spend the money on new shoes for kids and mac’n’cheese for the dinner table, which creates jobs and boosts our troubled economy. The Recovery Act, which has been supporting the economy via increased consumer spending, is slowly fading out, and these unemployment benefits would have helped prevent the loss of growth as the Recovery Act money peters out.

The Nay-Sayers:

There are two main reasons that some of our politicians oppose extending the benefits. First, they believe the country cannot afford it. Second, they believe that the benefits allow the unemployed to remain unemployed. Let’s talk about this:

Concern no. 1: The country can’t afford it. The last extension of the benefits occurred in July, 2010. The price tag was just 2.5 percent of the year’s deficit – about $34 billion. This bill, a 3-month extension, would have cost much less than half what July’s bill did – only about $12.5 billion. FCNL, and the American people, believe that the federal budget must be reprioritized, and when so much of the deficit spending goes to the Pentagon (without an audit!) this seems like proof that our budget priorities should be revised. Even without an examination of the budget deficit, the impact of this legislation in jobs and economic growth would have been worth the 1+ percent of the deficit it would cost us.

Concern no. 2: The benefits allow the unemployed to stay at home. To me, this claim seems both arbitrary and offensive, but let’s get to the facts. The fact that there are more than 5 unemployed people for each job opening that arises means that joblessness, not laziness, is the reason for our current sky-high unemployment rate. That there are 5 unemployed people for each job opening is bad news for many reasons, but when the economy has lost 8 million jobs, it seems likely that a good number of those 14.8 million people who are unemployed would like to go to bed NOT worried about money every night. Also, most of the UI benefits will only be available in states were unemployment is the worst (over 8%), which means that only people who are facing the worst competition for jobs will be eligible for the assistance.

The Glimmer of Hope:

The last time these benefits were up for a vote was last summer. In June, the Senate failed to pass the extension, and it was only when Robert Byrd’s successor was able to take his seat that the filibuster was broken and the 6-month extension was passed. That brings us to the current day. Is it possible for Congress to get these benefits passed in seven days? Many think it’s unlikely. But it could happen.

Depressed? Me too. I don’t think I’m going to be laid-off anytime soon, but maybe I won’t spend that extra money at Christmas time. Uh-oh.

Sources:

• Job growth improves, but pace leaves full employment 20 years away (Economic Policy Institute)
• Unemployment benefits: Read this shirt (The Economist)
• Jobless benefits bill fails in the House of Representatives (Politico)