Long-term jobless face deep cuts in benefitsTime is running out for Congress to renew extended unemployment benefits for millions of American workers out of a job. If the latest GOP proposal is enacted, time will also run out a lot sooner for the checks workers collect for extended jobless insurance benefits.
Workers in states with the worst job markets would be hit hardest under the GOP plan, which would shorten the maximum length of time a worker can collect benefits. In California, where the unemployment rate stands at 11.7 percent, the current 99-week maximum would be cut by 40 weeks. Workers in other hard-hit states, including Michigan, Illinois and Florida, would also see their extended benefits run out 40 weeks sooner than the current program, according to an analysis by the Center on Budget and Policy Priorities.
Democrats in the House and Senate favor renewing the program in full. The length of time workers can collect unemployment insurance varies by state from anywhere between 60 to 99 weeks.
As with past deadlines to renew the program, Congress has tied the vote to a series of other issues. This year, the benefits extension is part of a package of nine of other spending bills, including an extension of a payroll tax cut that’s also set to expire Dec. 31. House Republicans are also holding out for approval of an oil pipeline, proposed from Canada to U.S. Gulf Coast refineries, that the Obama administration has postponed while awaiting a review of the project’s environmental impact.

advertisement

Unless the current law is renewed, an estimated 1.8 million workers will lose their weekly insurance check on January 1. The White House, which supports renewing the current program, has estimated that through 2012, about 6 million people would lose federally-funded extended benefits if Congress doesn't act.
The existing program of jobless benefits consists of a complex series of extensions to state-managed unemployment insurance that is paid for, in part, with premiums deducted from workers’ paychecks. As the jobless rate rose following the 2007 recession, Congress enacted series of those emergency extensions – or tiers – to the state-funded plans that typically provide 26 weeks of benefits.
There are four tiers of extended benefits. The Republican plan would maintain the first, 20-week, tier and cut the second one, now available in states with a jobless rate above 6 percent, by one week, to 13 weeks. The current third and fourth tiers, which provide as much as 19 weeks in states where the jobless rate is 8.5 percent or higher, would be eliminated. A separate Extended Benefits program can add as much as another 20 weeks, depending on the jobless rate in the state. That program would expire gradually, state by state, through 2012.
Despite recent signs of improvement in the job market, the unemployment rate has remained stubbornly high compared to past economic recoveries. That’s especially true for people out of work for extended periods. The jobless rate has exceeded 8.5 percent for the past 31 months, longer than at any time since the Bureau of Labor Statistics began tracking that rate in 1948. The average duration of unemployment now stands at nearly 41 weeks, according to the latest monthly jobs data.

advertisement

That number will likely remain stubbornly high until the economic recovery spreads to several critical industries that haven't been hiring. Those sector aren't adding jobs because they’re “structurally impaired,” according to a recent research report from economists at Credit Suisse. And it looks like they’re going to remain crippled for some time.
From real estate, to finance to manufacturing, these sectors have all but shut down as job-creators. Together, these industries account for about half of the jobs lost from the January 2008 peak to the January 2010 trough. With little or no job growth from these sectors, it’s as if half of the job market’s cylinders just aren’t firing