Revised November 21, 2002

by Isaac Shapiro and Wendell Primus

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On Friday, November 22, the House of Representatives will have one last chance to prevent the federal temporary unemployment benefits program from expiring on December 28.  The Senate has adjourned for the year, and the only option left for continuing this program is for the House to adopt bipartisan Senate legislation to extend this program for three months.  This is unlikely to occur unless the Administration, which largely has been missing from the debate over this matter in the past two weeks, exerts leadership on this issue and urges the House to act.

If the House fails to act, the consequences for the unemployed will be immediate and dramatic:

  • At the end of the year an estimated 830,000 jobless workers who will be receiving these benefits will have them cut off immediately.

  • Starting on December 29, an additional 95,000 jobless workers per week will run out of state unemployment benefits without finding a job and get no temporary federal unemployment assistance.[1]

  • By the end of March, a total of 2.1 million jobless workers will not receive temporary benefits who would receive them under the Senate bill.  (See Table 1 for state-by-state data.)

If the House fails to act, the TEUC program will only have been in effect for less than 10 months.  By contrast, in the wake of the recession of the early 1990s a temporary federal benefits program was in place for 30 months, or three times as long.  The TEUC program will expire even though the number of jobs in the economy has actually decreased in the past two months and even though by a number of indicators the current economic slump has hit workers as hard as the recession of a decade ago.

Finally, letting the TEUC program expire is precisely the wrong step to take when there is widespread agreement about the need for more, not less, economic stimulus.  Letting the program expire will diminish economic demand among unemployed workers.

The House versus the Senate Bills

On November 14, the House and Senate each passed bills relating to the TEUC program, which is currently scheduled to expire on December 28.  The bipartisan Senate bill, H.R. 3529, extends the entire program for another three months, while the House version, H.R. 5063, sharply cut backs the existing program and lasts for only five weeks.  The Senate bill reflects a compromise worked out by Senate Minority Whip Nickles (R-OK) and Senator Clinton (D-NY), amongst others.  It passed the Senate by unanimous consent.  The approaches differ as follows:

  • Under the House bill, unemployed workers who exhaust their regular benefits after December 28 would qualify for federal TEUC benefits only if they live in the very small handful of states determined to have “high unemployment”; only three states now meet the restrictive criteria used to categorize states as high unemployment.  Further, even in those small number of states, those benefits would be cut off after February 2.

  • The House bill would also provide some modest assistance to a subset of unemployed workers in other states — those who are already receiving TEUC benefits on December 28 but have not yet gotten their full 13 weeks of benefits — by postponing the cut-off date for their benefits until February 2.

  • Under the Senate bill, the full TEUC program would continue for another three months, until March 29.  As a result, everyone who exhausts regular benefits after December 28 would still be eligible for TEUC benefits.  In addition, unlike the House bill, the Senate bill does not impose an arbitrary cut-off date; workers receiving TEUC benefits on March 29 would still continue to receive the full number of weeks for which they are eligible.

Unfortunately, neither bill would help the one million workers who have already exhausted all their TEUC benefits and have still been unable to find a job.  Assistance to this category of workers was part of certain earlier Congressional proposals but was dropped in the crafting of the Senate bipartisan compromise.

This week House Republicans resisted overtures from the Senate to find a compromise between their bills.  As late as the day the Senate adjourned (November 20), Senate Democrats offered to agree to scale back the Senate bill to five weeks, but this offer was rejected by House Republicans.  The House is in session on Friday and could adopt the Senate bill if the House leadership desired.  If the House does not act, the TEUC program will expire on December 28.

If the House does not act, it is possible but by no means certain that Congress could act in early January to assist these unemployed workers retroactively.  Such an approach would be administratively burdensome and confusing.  At the end of December unemployed workers receiving TEUC benefits would need to be notified that these benefits are ending.  A few weeks later they would all need to be notified again that they would be eligible for additional benefits.  More importantly, it would add to the precarious financial plight and tricky financial planning of the unemployed.  For the large number of long-term unemployed who have already likely exhausted or nearly exhausted their own financial resources, any week without benefits or a paycheck can create difficulties. 

Moreover, it is also possible that Congress will not act in early January to assist some, most, or all of these workers.  Action could be delayed well into January or February, further harming the unemployed, or might never happen at all.

Missed Opportunity for Providing Immediate and Well-Targeted Economic Stimulus

The failure to extend the TEUC program would also represent a missed opportunity to provide ongoing and effective economic stimulus.  Unemployment insurance provides well-targeted economic stimulus; its benefits increase consumer spending in the hardest-hit areas and among the hardest-hit workers.  Moreover, unemployment benefits go to workers who are likely to spend them quickly, as many of these workers are facing economic hardship and need additional income to meet immediate household needs.  Boosting consumer spending quickly is widely viewed as one of the most effective ways (if not the most effective way) to sustain and strengthen the economic recovery.

Indeed, by letting the program expire on December 28, the unemployed will have less money to spend, thereby dampening demand in many of the nation’s hardest hit areas.  So less economic stimulus, not more, would be provided through unemployment insurance programs.

Table 1
Estimated Number of Workers who Would be Assisted by the Senate Plan (H.R. 3529)
 to Extend the TEUC Program Until March 31 and Eliminate the "Hard Cut-Off" *
  Estimated Number of Workers
Who Would Be Cut Off TEUC
 at the End of December
Estimated Number of Workers Who Will Exhaust Regular UI Benefits Between December 28 and the End of March Total Workers Assisted
Alabama 6,000 11,800 17,800
Alaska 5,200 7,500 12,700
Arizona 7,400 12,900 20,300
Arkansas 4,800 10,900 15,700
California 129,900 187,200 317,100
Colorado 14,500 19,700 34,200
Connecticut 10,600 13,700 24,300
Delaware 1,800 2,400 4,200
DC 1,700 3,600 5,300
Florida 40,500 52,700 93,200
Georgia 20,600 37,000 57,600
Hawaii 1,800 2,700 4,500
Idaho 2,700 6,400 9,100
Illinois 41,700 52,100 93,800
Indiana 13,300 25,200 38,500
Iowa 5,300 8,900 14,200
Kansas 4,600 9,600 14,200
Kentucky 6,700 8,900 15,600
Louisiana 7,900 11,600 19,500
Maine 3,000 2,900 5,900
Maryland 7,900 11,800 19,700
Massachusetts 23,700 37,300 61,000
Michigan 32,900 48,900 81,800
Minnesota 11,900 17,900 29,800
Mississippi 5,900 7,800 13,700
Missouri 12,600 20,200 32,800
Montana 1,200 3,200 4,400
Nebraska 2,700 5,900 8,600
Nevada 5,400 11,400 16,800
New Hampshire 800 1,800 2,600
New Jersey 40,700 57,500 98,200
New Mexico 2,000 4,600 6,600
New York 65,900 111,000 176,900
North Carolina 28,000 31,800 59,800
North Dakota 900 1,800 2,700
Ohio 22,900 29,700 52,600
Oklahoma 5,200 9,100 14,300
Oregon 28,800 21,200 50,000
Pennsylvania 35,600 52,700 88,300
Rhode Island 3,100 5,100 8,200
South Carolina 9,900 14,300 24,200
South Dakota 200 600 800
Tennessee 16,400 22,500 38,900
Texas 62,100 151,000 213,100
Utah 5,400 8,200 13,600
Vermont 1,000 1,400 2,400
Virginia 8,600 17,700 26,300
Washington 45,400 31,800 77,200
West Virginia 2,500 3,700 6,200
Wisconsin 13,200 20,500 33,700
Wyoming 400 2,100 2,500
Total 833,200 1,252,200 2,085,400
Note:  *Currently, only Alaska, Oregon, and Washington qualify to provide the second tier of TEUC benefits.  This table assumes that no other states meet the trigger requirement, and that these three states remain qualified.  

End Note:

[1] The unemployed in a small handful of states might be eligible for additional UI benefits under the permanent extended benefits program, whose funding is split between the federal government and the states.  Currently, three states are eligible for this program.