The U.S. House decided not to vote on the jobs bill today—and that’s really bad news for America’s jobless workers, especially the millions of long-term unemployed. They desperately need the jobs bill because it extends unemployment insurance (UI) for those who have been without a job for 26 weeks or longer. And while members of Congress head home for the Memorial Day holiday, they will have to explain to their constituents why they didn’t vote on a bill that would create badly needed jobs—but managed a vote that would give them time-off around the Memorial Day weekend.
Without passage of the bill, more than 8 million people will exhaust their benefits by the end of the year, leaving their families with no money for life’s basic necessities such as food and shelter, Economic Policy Institute (EPI) economist Heidi Shierholz predicts.
EPI estimates that the bill’s package of aid to states, infrastructure projects, extension of UI and COBRA benefits, creation of summer jobs, loan guarantees for small business and other provisions will help save or create more than 1 million critically needed jobs.
The EPI report notes that not only will the UI and COBRA extensions benefit “the nearly 10 million Americans who have lost their jobs and are receiving unemployment compensation while they look for work,” but the safety net spending also will benefit “the economy as a whole by circulating cash into local communities and helping businesses avert further job cuts.”
In an economy that is not creating new jobs, extending long-term unemployment benefits is not only the humane thing to do, it makes good economic sense, says Shierholz. She and several labor economists discussed the nation’s long-term jobless crisis yesterday during an EPI forum, “Long-Term Unemployment: Causes, Consequences and Solutions.”
Congressional Republicans are wrong when they say UI prolongs joblessness, said EPI President Lawrence Mishel. It is “distressing” that anyone would even question whether unemployment insurance should be extended, he says.
Mishel said research shows that extending jobless benefits for a year could create or maintain about 800,000 jobs. But the current method of doling out the extensions in “dribbles a month at a time” is doing little to create jobs, he says.
Nearly half—46 percent—of all unemployed workers have been out of work for six months or more—some 6.7 million workers. That is the highest number of long-term unemployed since the 1930s Depression, says Shierholz.
It’s good news that the economy added 290,000 jobs in April, but at that rate, she says, it would take five years just to get back to the levels before the recession began in 2007.
A report distributed at the forum by the National Employment Law Project (NELP) found that a severely depressed job market—not unemployment insurance—is the cause of long-term unemployment. With 5.6 workers for each available job, odds are slim that a worker will be able to get a job quickly, the report says.
Unemployment insurance also is a fiscal stimulus for the economy, says Harvard University economist Raj Chetty. Jobless workers spend the money they receive for essential items—food, college tuition, etc. This consumption helps stabilize the local economy in the communities where these workers live.
Chetty said his research shows the median savings for an unemployed family is less than $250. That means the family needs more income to pay bills that you can’t cut back on, like mortgages and utility bills. Because they are unemployed, they can’t get credit to borrow the money so they cut back on other items such as food, medicine and other items without a fixed cost. So, says Chetty, UI returns far more to the economy than it costs to provide it.
The NELP report also points out that UI enables families to maintain their savings and avoid severe financial hardships. And with long-term unemployment at such high levels, extending benefits would be critical to preventing poverty and even greater economic hardship for the unemployed.
Jesse Rothstein, chief economist at the U.S. Department of Labor, and Columbia University economist Till von Wachter also spoke at the forum.