The Unemployment Compensation Extension Act of 2008 provides an additional 7 weeks of unemployment insurance to out-of-work Americans. Together with previous legislation, it authorizes a total of 20 weeks of extended unemployment insurance beyond the 26-week regular benefit period. In states in which the unemployment rate is particularly high (6.0% or above), the legislation adds 13 weeks to the extended benefits (for a total of 33 weeks of extended benefits).
The Middle-Class Position:
The Middle Class Supports. The nation’s unemployment rate soared to 6.5% in October, leaving middle-class Americans increasingly at risk of being thrown out of work as a result of the economic downturn. Further, it is taking those without work longer to find jobs: 2.3 million Americans were unemployed for 27 weeks or longer in October, an increase of 249,000 in a single month. The National Employment Law Project estimates that almost 1.2 million workers would exhaust their extended benefits by the end of the year without another extension.
Unemployment benefits provide direct assistance to the current and aspiring middle-class Americans likely to be hardest hit during the economic downturn, people who want to work but have lost their means of support through no fault of their own. Moreover, the unemployed are most likely to spend their unemployment benefits immediately, providing an important economic jolt. Indeed, extension of unemployment benefits provides $1.64 in stimulus for every dollar spent, making the policy one of the most effective stimulus measures.
From the Experts:
“As intended when the program was created during the great depression, unemployment insurance remains the first line of defense to help boost those communities hardest hit by economic downturns and prevent devastating economic hardship for millions of Americans. For families impacted by a sudden job loss, unemployment benefits can make the difference between getting by and facing major financial distress. And our economy counts on the unemployment program to replace billions of dollars of spending power lost when payrolls are cut.” – Christine L. Owens, Executive Director, National Employment Law Project, 10/29/2008
“Things will not likely get better for job-seekers in coming months. The economy shrank in the third quarter (July-August-September), and economists are forecasting an even larger contraction in the fourth quarter. In the most recent round of bad news, the Institute for Supply Management index of the strength of manufacturing activity has fallen to a level below that in the depths of the previous two recessions, auto sales have plunged, and initial claims for unemployment insurance are approaching 500,000, their highest levels since late 2003. In such a weak labor market, unemployed workers are much more likely to exhaust their unemployment insurance (UI) benefits before they can find a job.” – Chad Stone, Chief Economist, Center on Budget and Policy Priorities, 11/7/2008
Beyond this Bill:
This extension of unemployment benefits is the absolute minimum action Congress could take to assist middle-class Americans in the failing economy. While a bailout of the auto industry in normal times would be undesirable, the current economic situation requires that Congress and the President act to save the 3 million middle-class jobs linked to American automakers. Further stimulus is also critical. State, city, and local governments are contemplating drastic service cuts – most notably in health care and education – to close widening budget gaps. Federal aid could stave off these cuts, which will primarily affect aspiring middle-class and middle-class Americans. Federal investment in infrastructure projects would both generate jobs and provide an opportunity to repair the nation’s crumbling transit systems, water and sewage facilities, and school buildings.
Congress should also act to enable more out-of-work Americans to qualify for unemployment benefits and should encourage states to raise maximum benefit levels so they provide additional support to middle-class families and additional stimulus to the economy. The Unemployment Insurance Modernization Act would make the system function more effectively.
Last month in which the unemployment rate was 6.5%: 3/1994
Number of Americans unemployed for 27 weeks or longer in October of 2008: 2.3 million
Estimated number of workers who would exhaust the 13-week program of Emergency Unemployment Compensation by December 31, 2008 without this legislation: 1,163,995
Weekly unemployment benefits received by the average worker: $239
Percentage of unemployed workers who collect jobless benefits: 37
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