How Long Should Unemployment Benefits Last?

March 11, 2010

Do you think extending unemployment benefits is a good idea?

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By Angie Moreschi:

Does extending unemployment benefits just end up extending unemployment?   It’s a question a lot of people are asking as the Senate passed yet another extension of jobless benefits.  The provision to extend unemployment benefits is part of a $138 billion package which also extends dozens of expiring tax benefits, eases corporate pension requirements, and heads-off a cut in Medicare reimbursements to doctors.  The bill passed in a 62-36 vote.

The unemployment provision in the new bill extends benefits up to 99 weeks, which is almost 2 years. Benefits have generally been limited to 26 weeks or 6 months, but several extensions already enacted have elongated the benefit time period to 78 weeks, which is 18 months.  And now, this will extend it again to 99 weeks.

The extensions come in the face of extraordinarily trying economic times which have made finding a job difficult.  The jobless rate held steady at 9.7% in February, with 14.9 million Americans reportedly out of work.  Those individuals have been unemployed for an average of 29.7 weeks.

Critics say the unemployment benefits program which was created as a temporary bridge for laid off workers is turning into a very expensive entitlement.  About 11.4 million out-of-work people now collect unemployment compensation, at a cost of $10 billion a month.  Unemployment compensation is funded largely through employer taxes, but occasional extensions by Congress are made on a federally funded basis.

Helping Hand or New Form of Welfare?

At what point does a helping hand turn into a hand-out that people abuse?  An increasing number of opponents suggest extending jobless benefits discourages people from trying to find a job.

Sen. Jon Kyl (R-Ariz.) told the Senate he questioned why anyone would see unemployment benefits as helpful to the economy, or to the job market. “If anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work,” Kyl said. “I am sure most of them would like work and probably have tried to seek it, but you can’t argue it is a job enhancer.”

A labor economist at the Heritage Foundation told the Washington Post that with all the extensions unemployment benefits are turning into a form of welfare.  “It is appropriate and natural for Congress to extend the time limit of unemployment insurance with the job market as bad as it is, but by quadrupling it, it is no longer an unemployment insurance program but a welfare program,” said James Sherk.

Necessary in Difficult Times

Others say the extensions are necessary in these difficult economic times. The National Employment Law Project urged Congress to pass the latest extension without to prevent thousands of people from losing their unemployment benefits.

“Congress must swiftly act to maintain the lifeline for millions of jobless Americans caught in the undertow of record long-term unemployment in this ongoing downturn,” said NELP director Christine Owens in a statement.

Is 99 Weeks Too Much?

The centerpiece of the measure passed by the Senate would extend provisions offering the jobless as many as 99 weeks of unemployment assistance averaging $300 per week along with a 65 percent subsidy to help buy health insurance through the federal Cobra program.  In general, benefits are based on a percentage of an individual’s earnings over a recent 52-week period – up to a State maximum amount.

Unemployment benefits were created as part of the Social Security Act in 1935, intended to provide the unemployed some portion of their income while helping the economy weather down times. In 1970, federal law was amended to allow for extensions within the unemployment system during periods of high and rising unemployment. Nearly two-thirds of the jobless collect unemployment benefits, which go only to those who have earned a certain amount of money in the previous year, and who lost their jobs through no fault of their own.

Do unemployment checks discourage people from finding work? What if the checks keep rolling in for nearly two years?  Is it worth it? Weigh in by voting in the CWN poll above.