Jobless benefits to end Saturday

Staff Writer
Columbus CEO

About 52,000 unemployed Ohioans, including more than 6,700 in this region, will lose their extended jobless benefits starting Saturday since Congress has not taken action to prevent the federally funded program from expiring, according to data from the Ohio Department of Job and Family Services.

Without an extension from Congress, the program will end and the maximum amount of time unemployed Ohioans can receive jobless benefits will shrink to 26 weeks from 63 weeks.

Some economic researchers say that failing to renew the program will hurt struggling jobless residents and their families who need support as they search for employment in a brutal labor market.

“Given how weak the labor market is, and how far we are from a full recovery, it is unthinkable that Congress would fail to extend this crucial lifeline that also provides key support to a still-weak economy,” said Dan Crawford, a spokesman for the liberal-leaning Economic Policy Institute in Washington, D.C..

But some economists say lawmakers should allow the program to end, because it is costly to taxpayers and reduces the incentive for jobless residents to find work.

“The basic economic rule is that if you subsidize something, you get more of it,” said Chris Edwards, an economist with the Cato Institute, a Washington-based libertarian think tank. “If you subsidize unemployment, you get more of it.”

Unemployed Ohioans can be eligible for up to 26 weeks of state jobless benefits. But they also may be eligible for compensation for an additional 37 weeks through the Emergency Unemployment Compensation program, which was created during the recession to help Americans who are unemployed long-term.

Extension debate

U.S. lawmakers has extended the temporary federal program multiple times since its inception. But a budget proposal in Congress does not provide an extension, and Congress has adjourned for the rest of the year.

Congress can still choose to renew the program after it reconvenes next year, and elected leaders can retroactively reinstate benefits for eligible jobless workers.

Senate Majority Leader Harry Reid, D-Nevada, vowed to take up the issue as soon as Congress returns from its winter hiatus, and President Barack Obama indicated that extending the program was a priority.

“We must do everything we can to support those who are still struggling following the worst economic crisis since the Great Depression,” said Sen. Sherrod Brown, D-Ohio, in a statement.

But some Republican lawmakers have signaled they will oppose an extension if it is not paid for and adds to the deficit.

“I’m willing to consider any credible proposal the President or Democrats in the Senate put forth to extend unemployment benefits, so long as those benefits address job creation and are paid for so we don’t add to our nation’s burdensome debt,” said Sen. Rob Portman, R-Ohio.

If the emergency compensation program ends Saturday, 52,402 Ohioans will lose their unemployment benefits, though about 10,000 to 11,000 recipients will exhaust their 63rd and final week of unemployment regardless of the program’s status, said Angela Terez, spokeswoman for the Ohio Department of Job and Family Services.

‘I want to work’

Among those losing benefits will be about 6,768 residents in Butler, Champaign, Clark, Greene, Miami, Montgomery, Preble and Warren counties.

Kate Fallucca said she was laid off in January after working two years for a consulting firm for dental practices.

Fallucca, 49, of Springfield, said she is eligible for six more payments of unemployment insurance, but she will only receive three if the program expires.

Fallucca said she has spent down her savings to pay crucial bills, such as medical expenses, and she is worried about her benefits being cut short before she can get a job because she has no other source of income.

“I am on my own, my parents are gone, and I’m not likely to inherit any money and I don’t have a spouse,” she said.

Fallucca said she had a job interview recently that went well and she hopes to receive an offer. She said she does not enjoy relying on unemployment insurance to pay the bills, but the program is vital and exists because it helps people scrape by during tough times.

“I want to work. I need to work,” she said. “I would never abuse the system and don’t want to use it any longer than I have to.”

Extended unemployment benefits are a lifeline for workers so they can feed their families and stay in their homes, some researchers said.

“Unemployment benefits are useful in allowing people to find work, and in reality, we simply don’t have the jobs,” said Zach Schiller, research director for Policy Matters Ohio, a liberal-leaning research organization.

Reducing deficit

In October, there were 2.9 unemployed people for every job opening, labor data show.

The unemployment rate last month was 7 percent nationally, much higher than it was in June 2008 (5.6 percent) when President George W. Bush signed legislation into law that created the emergency program, Schiller said.

“Our long-term unemployment is shockingly high — almost two out of every five unemployed workers in this country has been unemployed for more than 26 weeks,” he said. “And I think it is a misguided notion that if we cut off (unemployed workers’) benefits they will find jobs — I think it is a punitive attack on unemployed people.”

Congress is obsessed with deficit reduction, and its members are pursuing purely symbolic spending cuts that that do not truly help reduce the country’s debt burden, said Crawford, with the Economic Policy Institute.

The cost of extending the program through 2014 is roughly 0.4 percent of the projected 10-year deficit, he said. An extension, he added, would increase spending in the economy and would support 310,000 jobs next year.

But the U.S. economy has been out of a recession for more than four years, and the federal government has an enormous deficit, said Edwards, with the Cato Institute.

Extending emergency benefits despite improvements in the labor market and economy sets a dangerous precedent, and the United States must not become like the European welfare states where people can stay unemployed and collect benefits essentially forever, he said.

“There is no free lunch with government spending,” he said. “You can always profile the individual who will lose their benefits when this expires, but every dollar given to unemployed folks now is a dollar taken away from their children through greater government debt that will have to be paid back in the future.”

The academic evidence on unemployment compensation shows that longer and more generous unemployment benefits induce people to stay unemployed longer, he said.

Cutting benefits off earlier would force people to make tough career decisions sooner, such as whether to accept lower-paying work or switching industries, he said.

“People know they have to make a tough decision, but if they have six months worth of benefits, they will put off making a tough decision,” he said. “You want people to make those tough decisions, whether it is changing careers or moving to North Dakota to take an oil industry job.”


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