1.3 Million Jobless to Lose Unemployment Benefits Saturday

Unemployment Benefits
Jonathan J. Cooper/APRichard Mattos, 59, looks for jobs at a state-run employment center in Salem, Ore., on Thursday.
By BRADLEY KLAPPER

WASHINGTON -- More than 1 million Americans are bracing for a harrowing, post-Christmas jolt as extended federal unemployment benefits come to a sudden halt this weekend, entailing potentially significant implications for the recovering U.S. economy and setting up a tense battle when Congress reconvenes in the new year.

For families dependent on cash assistance, the end of the federal government's "emergency unemployment compensation" will mean some difficult belt-tightening as enrollees lose their average monthly stipend of $1,166.

Jobless rates could drop, but analysts say the economy may suffer with less money for consumers to spend on everything from clothes to cars. Having let the "emergency" program expire as part of a budget deal, it's unclear if Congress has the appetite to start it anew.

An estimated 1.3 million people will be cut off when the federally funded unemployment payments end Saturday.

Some 214,000 Californians will lose their payments, a figure rising to more than a half-million by June, the Labor Department said. In the last 12 months Californians received $4.5 billion in federal jobless benefits, much put back into the local economy.

More than 127,000 New Yorkers also will be cut off this weekend. In New Jersey, 11th among states in population, 90,000 people will immediately lose out.

Started under President George W. Bush, the benefits were designed as a cushion for the millions of U.S. citizens who lost their jobs in a recession and failed to find new ones while receiving state jobless benefits, which in most states expire after six months. Another 1.9 million people across the country are expected to exhaust their state benefits before the end of June.

Gene Sperling, the director of the White House's National Economic Council, said Friday that President Barack Obama wants an extension as soon as Congress return next month, warning the abrupt cut-off will deliver a blow to the U.S. economy.

"It defies economic sense, precedent and our values," Sperling said.

But Obama has no quick fix.
He hailed this month's two-year budget agreement as a breakthrough of bipartisan cooperation while his administration works with Democratic allies in the House and Senate to revive an extension of jobless benefits for those unemployed more than six months.

The Obama administration says those payments have kept 11.4 million people out of poverty and benefited almost 17 million children. The cost of them since 2008 has totaled $225 billion.

At the depth of the recession, laid off workers could qualify for up to 99 weeks of benefits, including the initial 26 weeks provided by states. The most recent extension allowed a total of up to 73 weeks, depending on the state.

Restoring up to 47 extra weeks of benefits through 2014 would cost $19 billion, according to the Congressional Budget office.

House Democrats led by Reps. Sander Levin of Michigan and Chris Van Hollen of Maryland sought to include an extension through March by offsetting the costs with potential farm bill savings. They were rebuffed.

Senate Democrats and some Republicans plan another push in 2014. Sens. Jack Reed, D-R.I., and Dean Heller, R-Nev., have introduced a bill offering a similar three-month extension, and Senate Majority Leader Harry Reid, D-Nev., has promised to bring it up. But as with much in Congress, an extension is no sure thing.

House Speaker John Boehner spoke with Obama about an extension earlier this month. Boehner and said his caucus would consider the possibility "as long as it's paid for and as long as there are other efforts that will help get our economy moving once again." He said White House has yet to introduce a plan that meets his standards.

For other Republicans, the bar is higher. Many of them look at signs of economic growth and an unemployment rate now down to 7 percent and expected to drop further as evidence the additional weeks of benefits are no longer necessary.

The effect of jobless benefits on the unemployment rates has been fiercely debated for decades. To qualify, people have to be seeking work. Tea partiers such as Sen. Rand Paul of Kentucky argue that the payments aggravate rather than relieve unemployment.

Reducing Unemployment

The benefits allow some jobseekers to hold out for higher wages. Without the benefits, they might accept lower-paying jobs, reducing the unemployment rate. Others may be looking for work only to keep the benefits flowing and will drop out of the job market entirely once the checks stop. In theory, that also would push the unemployment rate lower.

The flip side is that the benefits -- in addition to alleviating suffering -- get spent on consumer goods, stimulating the economy and creating jobs.

Extended unemployment insurance "is really a lifeline to help pay the bills, put food on the table, and put gas in the tank so people can look for work," argued Maurice Emsellem, policy co-director at the left-leaning National Employment Law Project.

Michael Feroli, an analyst at JPMorgan Chase (JPM), said ending the extended benefits will lower the unemployment rate by half a percentage point as the long-term unemployed leave the labor force. While that statistical change may look good on the surface, Feroli cautioned the drop could be accompanied by a similar decrease in consumer spending. That would also hurt clothing retailers, car dealers and other Main Street businesses.

Extending the program, on the other hand, would boost GDP growth by some 0.2 percent and increase full-time employment by 200,000 next year, the Congressional Budget Office estimated, but at the price of increasing the government's debt.

Advocates of extended benefits say communities hardest hit by the recession will feel the sudden loss of cash in circulation the most.

They cite a set of their own troublesome figures: three jobseekers still competing for each opening; some 4 million people in the ranks of long-term unemployed; unemployment lasting on average 37 weeks, two months longer than most states provide insurance.



Increase your money and finance knowledge from home

Goal Setting

Want to succeed? Then you need goals!

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

Add a Comment

*0 / 3000 Character Maximum

19 Comments

Filter by:
impalaanthony

The hell with other countries,,they hate us anyway,,,,,,,BOY,,, I WISH I COULD BE PRESIDENT,,,I'll show you change,,

January 01 2014 at 2:24 PM Report abuse rate up rate down Reply
SKCRCPUSCG

The big solution: GET A JOB! As I've hear it discussed, these unemployment benefits cost 12 billion dollars per year... The republicans made the proper demands to the President really.... find the monery and we, the Cnngress, will approve the extension. This, I think, is fair and I would suggest taking it out of the 700 billion defense budget, billions of which are a total waste of tax payer money anyway.

December 30 2013 at 1:33 AM Report abuse +1 rate up rate down Reply
jciabotte

DemocratsSay,
"We're broke" And can't help our own
Seniors, Veterans,
Orphans, Homeless,
Etc.,?????
But, over the last several years THEY
have provided direct cash aid to....
Hamas - $351 M, Libya $1.45 B,
Egypt - $397 M, Mexico - $622 M,
Russia - $380 M, Haiti - $1.4 B,
Jordan - $463 M, Kenya - $816 M,
Sudan - $870 M, Nigeria - $456 M,
Uganda - $451 M, Congo - $359 M,
Ethiopia - $981 M, Pakistan - $2 B,
South Africa - $566 M, Senegal - $698 M,
Mozambique - $404 M, Zambia - $331 M,
Kazakhstan - $304 M, Iraq - $1.08 B,
Tanzania - $554 M,

...with literally Billions of Dollars and they still hate us!!!!
But on the other hand,
Our retired seniors,
Living on a 'fixed income,'
Receive a 1.5% increase
And yet religious organizations will pour
Hundreds of Billions Of $$$$$$'s
and Tons of Food to Foreign Countries!
Someone needs to explain to them that
Charity begins AT HOME!!!


And another atrocity....
We have Hundreds of adoptable
American Children who are shoved aside
To make room for The adoption of Foreign orphans.
AMERICA: A country where we have
Countless Homeless without shelter,
Children going to bed hungry,
Elderly going without needed medication
and the Mentally ill without treatment -- etc.
YET..........
They will have a 'Benefit' Show
For the people of Haiti, on 12 TV Stations;
Ships and planes lining up with food, water, tents
clothes, bedding, doctors and medical supplies.


Gave 'US' the same support they give to foreign countries.

December 29 2013 at 8:02 AM Report abuse rate up rate down Reply
2 replies to jciabotte's comment
ualfriend

How much did the rpbubs give to corporate welfare?

December 29 2013 at 9:55 AM Report abuse -1 rate up rate down Reply
SKCRCPUSCG

You conveniently left out ISRAEL, THE BIGGEST PARASITE OF ALL!

December 30 2013 at 1:42 AM Report abuse +1 rate up rate down Reply
AL CONFER

Extended unemployment did nothing as jobs were available, but those that decided a job didn't pay enough or they chose to ride it out, hoping against hope that the tooth fairy was going to come along. In my city, companys wanted to hire some and one company closed down its shop because the owner found out that these supposed people that wanted you to believe they were looking for a job, in truth were just sitting it out. He sold the business and laid off people because he got tired of looking for those that actually wanted a job. The days of people believing that they are worth more than reality is over. Extended unemployment needed to be shut off, as yes, there are jobs, just not jobs that pay what you think your worth.

December 28 2013 at 8:13 PM Report abuse +4 rate up rate down Reply
1 reply to AL CONFER's comment
ualfriend

what load of bs

December 29 2013 at 9:57 AM Report abuse -3 rate up rate down Reply
1 reply to ualfriend's comment
AL CONFER

ualfriend....Why don't you open up a business instead of thinking what I stated as BS. When you open up that busness, and attempt to locate good employees, you will find out that most just want a paycheck, and do little work, are taking excessive time off, and then get upset because they get called out for not doing their jobs. When you take the leap to opening your on business, you will just love what it cost to just get open and that is before you make one dime. Government intrusion, licensing, fees light bills, gas bills, insurance, cost for equiptment to mantion just a few. Obviously you believe my message is BS, so, open up your own business and see what real BS is.

December 29 2013 at 12:05 PM Report abuse +2 rate up rate down
Valerie

Well, it's Saturday. I guess this is the big day for over a million people to deal with the reality of life without unemployment benefits. The cavalry didn't come over the hill at the last possible moment.

December 28 2013 at 11:32 AM Report abuse +1 rate up rate down Reply
jdykbpl45

Obama wanted this. He signed the bill!

December 28 2013 at 10:38 AM Report abuse +2 rate up rate down Reply
k4jlp

Not to worry Congress is enjoying their Holiday and we continue to piss away BILLIONS in Afganistan and in other Countries as America continues to stick it's nose where is does not belong. Next will be the South Sudan party. Watch as the MIC directs our Government to send our men and women in the Military to secure those oil futures contracts and issue a Bush like "mission accomplished" announcement. When are we Americans going to get the attention of our elected yet bought off Congress? Never? The House of Representives do not represent me any longer.

December 28 2013 at 9:18 AM Report abuse +1 rate up rate down Reply
white41990

Good thing I got a job offer at a decent pay rate to begin the first week into the new year, been getting notices myself unemployment is set to expire, last week to collect is week ending 12/28/13 couldn't ask for a better xmas present, new job to begin on 01/06/2014.

December 28 2013 at 2:19 AM Report abuse rate up rate down Reply
1 reply to white41990's comment
Valerie

@ White: You didn't mention how long you have been job hunting, but I hope that new job works out well for you.

December 28 2013 at 11:30 AM Report abuse rate up rate down Reply
TINKDAY

Well now the government can continue to tell us the employment picture is better, see 11/2 million fewer people are drawing unemployment benefits, just like food stamps ,cut food stamps ,economy is better less people needing food stamps, wow.

December 27 2013 at 10:46 PM Report abuse rate up rate down Reply
Robert & Lisa

At least the people hurt the most by Obama and his failed Socialist policies are the ones who voted for him.

December 27 2013 at 9:24 PM Report abuse -1 rate up rate down Reply