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Jobs Bill Stuck in House, Economists Say UI Is Key to Rebooting Economy
The U.S. House decided not to vote on the jobs bill today—and that’s really bad news for America’s jobless workers, especially the millions of long-term unemployed. They desperately need the jobs bill because it extends unemployment insurance (UI) for those who have been without a job for 26 weeks or longer. And while members of Congress head home for the Memorial Day holiday, they will have to explain to their constituents why they didn’t vote on a bill that would create badly needed jobs—but managed a vote that would give them time-off around the Memorial Day weekend.
Without passage of the bill, more than 8 million people will exhaust their benefits by the end of the year, leaving their families with no money for life’s basic necessities such as food and shelter, Economic Policy Institute (EPI) economist Heidi Shierholz predicts.
EPI estimates that the bill’s package of aid to states, infrastructure projects, extension of UI and COBRA benefits, creation of summer jobs, loan guarantees for small business and other provisions will help save or create more than 1 million critically needed jobs.
The EPI report notes that not only will the UI and COBRA extensions benefit “the nearly 10 million Americans who have lost their jobs and are receiving unemployment compensation while they look for work,” but the safety net spending also will benefit “the economy as a whole by circulating cash into local communities and helping businesses avert further job cuts.”
In an economy that is not creating new jobs, extending long-term unemployment benefits is not only the humane thing to do, it makes good economic sense, says Shierholz. She and several labor economists discussed the nation’s long-term jobless crisis yesterday during an EPI forum, “Long-Term Unemployment: Causes, Consequences and Solutions.”
Congressional Republicans are wrong when they say UI prolongs joblessness, said EPI President Lawrence Mishel. It is “distressing” that anyone would even question whether unemployment insurance should be extended, he says.
Mishel said research shows that extending jobless benefits for a year could create or maintain about 800,000 jobs. But the current method of doling out the extensions in “dribbles a month at a time” is doing little to create jobs, he says.
Nearly half—46 percent—of all unemployed workers have been out of work for six months or more—some 6.7 million workers. That is the highest number of long-term unemployed since the 1930s Depression, says Shierholz.
It’s good news that the economy added 290,000 jobs in April, but at that rate, she says, it would take five years just to get back to the levels before the recession began in 2007.
A report distributed at the forum by the National Employment Law Project (NELP) found that a severely depressed job market—not unemployment insurance—is the cause of long-term unemployment. With 5.6 workers for each available job, odds are slim that a worker will be able to get a job quickly, the report says.
Unemployment insurance also is a fiscal stimulus for the economy, says Harvard University economist Raj Chetty. Jobless workers spend the money they receive for essential items—food, college tuition, etc. This consumption helps stabilize the local economy in the communities where these workers live.
Chetty said his research shows the median savings for an unemployed family is less than $250. That means the family needs more income to pay bills that you can’t cut back on, like mortgages and utility bills. Because they are unemployed, they can’t get credit to borrow the money so they cut back on other items such as food, medicine and other items without a fixed cost. So, says Chetty, UI returns far more to the economy than it costs to provide it.
The NELP report also points out that UI enables families to maintain their savings and avoid severe financial hardships. And with long-term unemployment at such high levels, extending benefits would be critical to preventing poverty and even greater economic hardship for the unemployed.
Jesse Rothstein, chief economist at the U.S. Department of Labor, and Columbia University economist Till von Wachter also spoke at the forum.
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7 Comments
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I have been a lifelong Republican. I believed that if you were willing to work, you could always find a job and support yourself and your family. Confident, even cocky I suppose in hindsight, I generally thought that welfare was a lifestyle people chose.
After working more than 20 years at a well paying job, I was a victim of widespread job cuts. The fact that I was a long term employee actually worked against me as bureaucrats eagerly cut many of us who had the highest salaries to maximize their savings.
My job ended December 3 2009. My benefits are set to expire next week. I have faithfully applied to job after job. I started out thinking I could make this a positive by starting afresh doing something new.I knew I was well qualified for many types of jobs. At this point I am not only discouraged but I’m starting to feel hopeless. Bad enough to feel the rejection of not getting interviews or a job,but now I am worried about economic survival.
What will I do when my unemployment benefits end? I am outraged that our representatives seem willing to let people go under when they have lost a job through no fault of their own and there are not enough jobs to make a dent in the jobless situation.
Even if they eventually pass the extension, what possible explanation justifies letting all of us at the end of our initial benefits to worry and agonize about what we will do in another week?? And the next. And the next.
I am making note of who is arguing against extending unemployment benefits. Joblessness is NOT a choice for most of us. I have modified many of my opinions about welfare, etc. so perhaps I can feel good about coming to some important revelations. It is just too bad that I might not be able to make my house payment or eat as a result of the circumstances surrounding my enlightenment.
Oh, and I am most assuredly not a Republican any longer.
Break with the Democrats! Build a party for ordinary working people (and all those millions who have been screwed over by both the Republicans and the Democrats). Ordinary working people, not multimillionaires in the hip pocket of Wall Street! Here’s a name we can use for it: Workers Party. We’re the only industrialized nation without one. U.S. labor needs to organize the millions of unemployed and underemployed and march on Washington. The era of modest action by labor is over. We need enormous, continuing public demonstrations, strike solidarity, and a call for a general strike. We need to take back the economy from Wall Street thieves and the banksters. We need a massive jobs program now, large enough to serve the needs of millions of unemployed people, and provide them with liveable, unionized jobs, right now! Look around: everywhere you look there is work to be done, rebuilding the crumbling infrastructure and public services of this country. Yet the republicans and now the Democrats have chosen to bail out the banks and Wall Street and continue wasting billions on endless wars. One more thing: No scapegoating of immigrant workers! They did not cause this problem. Workers everywhere have more in common with each other than with the bosses and their corporate propaganda mills. Ordinary working people did not cause the financial disaster and they should not pay for it! Tax the Rich! End the Wars! Build the Workers Party!
I agree with you on most of your points. but I am beginning to disagree with you on the scapegoats. I have been harping that no Illegal Immigrant should be arrested and deported unless that persons Employer and slumlord are also arrested. They complain that the aliens do jobs that none of us would do. Perhaps this is so when it comes to picking crops, washing dishes, bussing tables, these were jobs performed by HS students as a first job when I was in HS in the late 1960′s.
I was disappointed when I heard about the AFL/CIO coming to the support of SCABS, welders from India who slaved for Allied Signal welding ships. Shipyards used to be good Union jobs, but they are going to India to hire welders because welders cannot be found in the USA? BS! Welders are out of work also, but they demand a fair wage, not minimum wages with dormitory housing benefits.
Yesterday I read an article about a San Diego Restaurant that was raided by ICE, the employer was arrested as well as the illegals. THIS I support, NOT just a rounding up of employees like swift packing plants, I do not believe any management were arrested, and they only hit 1 shift.
Break with the Democrats!
Break with the administration!
Where is all the stimulus money going?
Cut the stimulus & bail out that goes overseas.
Eliminate foreign aid from the cap & trade bill.
Extend unemployment payments here.
Its high time for Obama to do an end run around the blockers in Congress. The Job Corps alreday exists as part of the New Deal ccc legacy and serves at risk youths 18-24. Obama should declare a national emergency and expand Job Corps by executive decree. The JC should hire and train youths across the country in a renewed and expanded effort to rebuild the infrastructure. Meanwhile the Dems should push through another WPA and do the same for the unemployed, regardless of age. Enough talk. It is time to act.
How about we try something that will really work. Implement mandatory E-Verify and chase all the illegals out of the construction industry. An industry where the Union share of the work is continuely shrinking,and there not hiring Americans in the non Union companies. When do we stop listening to the lies of our political leaders who hold us in contempt! There is no job an American won’t do if its made available to them!
Attention All Congresspeople: In case you haven’t noticed, incumbants are being replaced. If you don’t pass the bill, you could need these benefits too.