Latest News & Current Events

Senate Democrats to fast-track reinstating unemployment benefits

Last month the Labor Department announced the US unemployment rate had hit a five-year low of 7% in November, but long-term unemployment remains stubbornly high. The expiration of the Emergency Unemployment Compensation (EUC) program on 28 December means that, according to an estimate by the National Employment Law Project (NELP), only one in four unemployed Americans are receiving jobless benefits – the smallest proportion in half a century.

Democrats believe the issue could lose Republicans votes in this November’s midterm elections. Some of the highest rates of unemployment are in Republican-controlled states, and polls show the public supports reintroducing federal benefits for the long-term unemployed.

This week the Labor Department reported that 1.39m people received the special extended benefits during the week ending 14 December, under an extension enacted in 2008, at the start of the recession, in order to help people looking for work.

The benefits, which apply to people who are unemployed for longer than six months, were left to expire on Saturday after a bipartisan budget deal on federal spending for the next two years failed to include a reauthorisation of the program.

Democratic leaders in the Senate are planning to fast-track legislation to extend unemployment insurance, a move that would provide a lifeline to more than a million jobless Americans who lost their benefits five days ago.

Senator Jack Reed, a Democrat from Rhode Island whose bipartisan bill will ensure a three-month extension of the federal benefits program, said the measure would stimulate the economy and alleviate what he called the “mental torment” suffered by those long-term unemployed who now feel abandoned.

“On a human level, many of these people are desperate,” Reed said in an interview on Thursday. “It is the difference between being able to pay their mortgage or not. Many of these are people who have worked for decades. They had good jobs, and they’ve been sending out sending out thousands of résumés, but they’re in a job market that is terrible.”

Reed’s bill, which is co-authored by the Nevada Republican Dean Heller, will only extend the federal benefits until the end of March – a temporary fix designed to allow congressional committees to work on a more permanent solution for the long-term unemployed. It would be applied retroactively, reimbursing those who lost benefits over the last week.

In a clear sign that Democrats plan to make poverty and inequality major issues in this year’s Congressional mid-term elections, Harry Reid, the Senate majority leader, told a reporter in his home state of Nevada earlier this week that the bill will be put to a vote when the Senate reconvenes on Monday.

Reed and Heller represent the two states – Rhode Island and Nevada – with the highest unemployment rates in the US.

Reed said 49,000 people – many of whom once had successful, managerial jobs – had lost benefits in Rhode Island over the last week. “Their suffering is the kind of mental torment of someone whose future is suddenly uncertain,” he said. “You’re 40 or 50 years old and you’ve worked all your life, and suddenly you’re thinking: I may never get a job anything like the one I had when I was laid off.”

The Congressional Budget Office estimated on Tuesday that the Heller-Reed bill would cost $10bn. Around 1.3 million jobless Americans received their last payment on Saturday. On average, a further 72,000 Americans are projected to lose their unemployment insurance each week through the first half of the year.

A recent study by the liberal Economic Policy Institute said that while it would cost roughly $25.2bn to continue the extensions, the economic stimulus would be significantly amplified because of the “multiplier” effect.

That is principally because research shows the long-term unemployed are likely to spend most if not all of their benefits on basic necessities, such as food and rent, thus boosting the economy.

Economist Heidi Shierholz, who jointly authored the study, said on Thursday that paying out unemployment insurance is consistently ranked as the second-most effective economic stimulus available to federal policy makers, after spending on food stamps.

“Those unemployment benefits were going straight back into the wider economy, increasing demand, and as of 28 December that has all been been sucked out. The one thing I can say is the decision to allow these insurance benefits to expire cannot be based on economics.”

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