Washington, DC 20002
Iris J. Lav
Board of Directors
David de Ferranti, Chair
John R. Kramer, Vice Chair
Henry J. Aaron
Barbara B. Blum
Marian Wright Edelman
James O. Gibson
Beatrix Hamburg, M.D.
Richard P. Nathan
Robert D. Reischauer
Juan Sepulveda, Jr.
William Julius Wilson
760,000 JOBLESS DENIED AID — AND COUNTING
From late December, when the federal program designed to help the long-term unemployed began phasing out, through the end of February, an estimated 760,000 jobless workers will have exhausted their regular unemployment benefits without receiving additional aid, according to new projections by the Center on Budget and Policy Priorities. This suggests both that the job market continues to be soft and that the federal unemployment program should be restarted.
“Last week the Administration backed off its own optimistic job-growth
projections for the rest of the year," said
The 760,000 figure is based on previously released data for December, just-released data for January, and a Center estimate for February. New Labor Department data for January show that about 350,000 individuals exhausted their regular unemployment benefits last month and received no further unemployment assistance. In no other month on record, with data available back to 1971, have there been so many “exhaustees." (The attached table provides state-by-state data on the number of exhaustees in January.)
Nevertheless, legislation to restart the federal unemployment benefits program is languishing in Congress. The House recently passed a measure to restart the program, but the Senate leadership has yet to permit a vote on the matter. The Administration has remained non-committal on whether the program should resume.
“Despite his repeated expressions of concern for the unemployed, President Bush has so far ignored the plight of three-quarters of a million individuals who have gone without unemployment aid," continued Shapiro. “If the President were to end his silence and express support for resuming federal aid to the unemployed, it is likely Congress would soon reinstate these benefits.”
End of Federal Program Means More Workers Going Without Help Each Week
The Temporary Extended Unemployment Compensation (TEUC) program was created in March 2002 to provide additional weeks of federally funded unemployment benefits to jobless workers who have run out of regular, state-funded unemployment benefits but have not found a job. Congress has created similar temporary programs during other periods of labor-market weakness in recognition of the fact that it takes longer to find jobs during such periods.
TEUC provided up to 13 weeks of benefits to most workers who participated in it. After being extended twice, it began phasing out in late December. Individuals who exhaust their regular unemployment benefits after December 20 are not eligible for TEUC aid.
From December 20 through the end of February, an estimated 786,000 individuals will exhaust their regular unemployment benefits. About 26,000 of them will qualify for additional unemployment aid through the permanent, but quite limited, federal/state "extended benefits" unemployment program. The remaining 760,000 individuals will not qualify for additional aid.
As a result, Congress’s failure to extend TEUC will have harmed about 760,000 jobless workers by the end of February, a figure that will rise each week thereafter.
Record Number of Exhaustees in January
The just-released Labor Department data for January 2004 are striking. In January:
Some 365,000 individuals exhausted their regular unemployment benefits.
estimated 14,000 of these individuals then qualified for additional aid
under the “extended benefits" program. (Four states qualified for
extended benefits at the beginning of the month. Only
Thus, about 350,0000 individuals exhausted their regular benefits and did not qualify for more unemployment aid. In no other month on record have so many of the unemployed exhausted regular benefits and not qualified for further assistance. (This finding holds even if the number of exhaustees in previous years is adjusted upward to reflect the growth in the labor force since then.)
These results are consistent with a prediction made in a recent Center report, Unmet Need Hits Record Level for the Unemployed. The report forecast that exhaustions in January would set a monthly record. Actual exhaustions in January, though slightly (six percent) lower than the report projected, still were larger than in any other month on record. The January data also support the report’s prediction that the first half of 2004 will see record numbers of exhaustions.
Would It Be Better Just to Wait for Jobs to Come Back?
Congressional resistance to resuming the TEUC program has largely been based on the argument that the program is no longer needed because the labor market is improving. A related argument is that providing federal benefits prolongs unemployment spells by reducing unemployed workers’ incentive to find a new job.
The Administration has sidestepped the issue, refusing to take a position on whether federal unemployment benefits should be continued. Its rhetoric has focused on job creation, with President Bush and others consistently saying they will not be satisfied until every American who wants a job has one.
There is no question that, at some point, the labor market will have recovered sufficiently that the temporary federal benefits program will no longer be needed. That point, however, has not yet been reached. There are 2.4 million fewer jobs in the economy than when the recession began. Even at double the pace of job growth in January, when 112,000 jobs were created, it would take until the end of the year for this jobs deficit to be closed.
“Everyone — especially the unemployed themselves — agree that a new job is the best response to unemployment," said Shapiro. “But the cold truth is that it will take some time before enough jobs are created that long-term unemployment returns to normal levels."
Further, if the existence of federal unemployment benefits had been the main reason the unemployed were not finding jobs, the number of workers exhausting their regular unemployment benefits should not have been exceptionally large in January, since the federal program was no longer open to these workers. In fact, exhaustions hit a record high level in January.
“Those who suggest that federal unemployment benefits will cause large numbers of the unemployed not to search hard enough for work misunderstand both current labor market conditions and the unemployed," concluded Shapiro. “Long-term unemployment remains pervasive because there are not enough jobs, not because of the modest government aid that some of the unemployed receive.”
# # #
 This report had also projected that if the TEUC program is not restarted, more workers will exhaust their regular unemployment benefits and not receive further aid in the first six months of 2004 than in any other six-month period on record, even after adjusting for the growth in the labor force. The report estimated that nearly two million unemployed workers will exhaust their regular benefits from January to June 2004 and go without further aid. If this estimate is lowered by six percent (reflecting the fact that the actual level for January was six percent below the January prediction used in the estimate), the finding still holds; there will still be a record number of exhaustees in the first half of 2004.