Revised January 14, 2003
NEW UNEMPLOYMENT INSURANCE PROPOSAL NEGLECTS
ONE MILLION JOBLESS WORKERS WHO HAVE
RUN OUT OF FEDERAL UNEMPLOYMENT BENEFITS
By Wendell Primus, Jessica Goldberg, and Isaac Shapiro
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The President signed legislation on January 8 that reinstates the temporary federal unemployment benefits program that expired December 28 for five months. This package was passed by the Senate on January 7 and the House on January 8. While reinstating this program is worthwhile, the legislation ignores one large group that deserves assistance the more than one million workers who have used up all of those federal benefits yet still have been unable to find work. The need to provide additional help to these workers reflects both the weakness of the current employment situation and the deficiencies of the federal program compared to the temporary program Congress created in the last economic downturn.
The federal unemployment program, called the Temporary Extended Unemployment Compensation (TEUC) program, was created in March 2002 as part of economic stimulus legislation; it provided additional weeks of unemployment benefits to workers who ran out of regular, state-funded benefits without finding work. It expired December 28.
In addition to restarting the TEUC program, there are several reasons why Congress also should provide additional weeks of benefits to the one million workers who have exhausted their TEUC benefits and remain without work:
- Significantly more workers have exhausted their federal benefits since TEUC began in March than ran out of federal benefits over a comparable number of months in the downturn of the early 1990s. By the end of December an estimated 2.2 million workers had exhausted their federal benefits. Of these, we estimate one million remain jobless today, and it is these one million workers that should receive additional help. (Despite claims to the contrary, there is little evidence that in a recession providing these workers with extra weeks of benefits which on average replace 38 percent of their previous earnings will discourage them from seeking jobs.)
- One reason why many more workers have exhausted their federal benefits in this downturn is that TEUC was considerably less generous than the temporary federal unemployment benefits program Congress created in the last downturn (which occurred in the early 1990s). In particular, TEUC provided significantly fewer weeks of benefits. Under the earlier program, each worker was eligible for at least 20 weeks of benefits some ten months after the program was enacted, while under TEUC, most workers were eligible for a maximum of 13 weeks of benefits. In addition, while both programs provided additional assistance to states designated as high-unemployment states, TEUC used much stricter criteria than the earlier program to determine if a state had high unemployment; currently only three states meet TEUCs criteria.
- Finding jobs has been difficult for those who have exhausted their TEUC benefits because the labor market remains weak. There are 1.5 million fewer jobs today than in March 2001, when the current downturn began, and the number of jobs in the economy has been essentially stagnant for several months. The current unemployment rate of 6.0 percent ties with April 2002 for the highest rate in nearly 9 years and is higher than when the TEUC program was created. Long-term unemployment (as measured by the 12-month average number of workers exhausting their regular state unemployment benefits) has increased in every month since March 2001.
Workers Left Out of Senate Plan to Extend Temporary Federal Benefits
Number of Workers Who Have Exhausted TEUC and Remain Unemployed
Alabama 12,300 Alaska 3,700 Arizona 12,200 Arkansas 10,200 California 108,500 Colorado 17,000 Connecticut 15,400 Delaware 2,000 District of Columbia 3,700 Florida 58,500 Georgia 27,600 Hawaii 3,100 Idaho 3,200 Illinois 53,100 Indiana 20,600 Iowa 8,700 Kansas 7,200 Kentucky 10,700 Louisiana 10,500 Maine 2,900 Maryland 10,900 Massachusetts 30,600 Michigan 49,200 Minnesota 17,400 Mississippi 7,400 Missouri 15,600 Montana 2,800 Nebraska 3,200 Nevada 8,800 New Hampshire 1,200 New Jersey 47,800 New Mexico 2,400 New York 84,200 North Carolina 37,600 North Dakota 1,000 Ohio 43,500 Oklahoma 9,000 Oregon 13,300 Pennsylvania 44,000 Rhode Island 5,200 South Carolina 18,800 South Dakota 400 Tennessee 27,400 Texas 56,800 Utah 8,900 Vermont 1,300 Virginia 14,700 Washington 31,500 West Virginia 3,300 Wisconsin 22,200 Wyoming 700 Total 1,012,200
 During the debate on the House floor, House Democrats also asked for, and were denied, consideration of providing benefits to the million still-unemployed workers who have exhausted all available benefits.