Unemployment Benefits: Expire or Extend?

Welcome to Politics Bites, where every afternoon at It's A Free Country we bring you the unmissable quotes from political conversations on WNYC. On today's Brian Lehrer Show,George Wentworth, senior staff attorney with the National Employment Law Project, and John Maggs, National Politics Reporter for POLITICO, reflect on the end of many federal unemployment benefits.

Today marks the deadline for Congress to act on extending federal unemployment benefits into 2011. If the legislation remains dormant, 200,000 New Yorkers and millions of other out-of-work Americans will see their benefits expire at the end of December.

Individual states provide about 26 weeks of unemployment insurance to residents, but following the economic tailspin of 2008 that left the unemployment rate lingering near 10 percent, the federal government authorized benefits for an additional 73 weeks of protection. The government has extended benefits in this fashion plenty of times before, but they usually don't let them last this long. As George Wentworth explained, that's because recoveries usually don't take this long either.

Over 40 percent of all the unemployed have been out of work for over six months, and close to a quarter have been out for a year or more. There are five unemployed workers for every existing job opening in the country right now. Even if you were to take an unemployed person and put them into every job opening now, you’d still have over 10 million unemployed. The justification for the longer duration of benefits is really a product of a very different kind of downturn.

For deficit hawks, though, these numbers aren't as scary as our national debt. Opponents of extending benefits argue that we simply can't afford it, and that it wouldn't be a good investment even if the money were there. Many conservative economists say that the provision of unemployment insurance can actually be a disincentive to looking for work; in other words, perhaps unemployment benefits don't decrease unemployment. John Maggs said that there might be something to that.

A program that was conceived in 1935 to be a temporary respite for production workers in factories who might be laid off for six months at the most has become a lifeline for the long-term unemployed in America. I think even some liberal economists are starting to wonder whether the program works as it does. If you keep paying unemployment benefits to someone for several years, they start losing their skills and dropping out of the workforce.

The result, Maggs said, could be a new underclass of American society.

People with less skills, less education, are really forming the core of that long-term unemployment group, which threatens to become, in another word, an underclass. This is a problem that different advanced economies have developed moreso than the United States: you have fairly generous benefits that create a class of people who are not too interested in working and can get by without working. In our case, the lack of skills and opportunities poses a very real risk of creating this underclass, which becomes a significant social problem for the country.

Several unemployed callers called in to offer their personal experiences. For a former IT professional named Frank, a tireless job search has yielded nothing for months. Though he does have the option to take part-time work, he says it doesn't make sense because it would be less income than his unemployment insurance provides.

Republicans try to make it look like we’re lazy bums. I’m getting no response whatsoever. I’ve redone my resume several times, and I’m sending it all over the place now, and it’s bleak. I was looking into maybe working part-time, and if I work 8 hours a day for 3 days, they will deduct $100 a day from my unemployment. Working 8 hours a day for 3 days at a job that pays $10 an hour, I’ll actually lose money.

There's that disincentive—but it's a lot more complicated than a simple "I'm getting paid, so I won't look for work" mentality. 

Supporters of benefits extension in Congress will likely have to find a way to pay for the benefits without adding to the deficit. That will be the only way to win over naysayers, but George Wentworth says that negotiating a pay-as-you-go extension would be abnormal.

Historically, these federal extensions have not been offset. They have always been treated as emergency spending, because when the national unemployment rate is this high that you need to reauthorize additional federal weeks, you in fact have a national economic emergency. Certainly it seems like offsets will be part of the political discussion, but our view would be that we have a national economic emergency, and it can be treated as emergency spending as it has been in the past.

Emergency spending or not, the one thing Americans can agree on these days is that if the government is going to keep cash flowing, we better be getting our money's worth. And as John Maggs pointed out, our unemployment system was designed with a 1930s industrial economy in mind. He says the debate over simply extending federal unemployment benefits doesn't get to the heart of fixing the mess we're in today.

I think everybody should know that there are ideas out there about reforming the program. Democrats have been talking about them for years. One of the consequences of this political stalemate is that we're not having conversations about doing things like changing the unemployment program to make it more useful to people and make it more efficient in getting workers back into the workforce.

Listen to the entire conversation on The Brian Lehrer Show.