SalemNews.com, Salem, MA

February 22, 2014

Watson: Extending jobless benefits will boost national economy

Brian T. Watson
The Salem News

---- — The great Wall Street meltdown of 2007 and 2008 had many terrible consequences. There were millions of home foreclosures; billions lost in retirement accounts; the bankruptcy or shutdown of thousands of banks, companies and small businesses; the shock to and duress on our society and our democracy; and the human suffering under all that trauma.

Certainly, one of the worst legacies of the meltdown remains with us today, and that is the extraordinarily high level of unemployment across — not uniformly — the country. Somewhere between 7 million and 9 million jobs were lost in the immediate aftermath of the crisis. In early 2010, at our lowest moment, something like 25 million people were either out of work or “underemployed” — meaning they needed substantially more hours or had taken enormous pay cuts.

Today, almost six years after the cataclysm, many lost jobs have not come back, and many will never come back. Depending upon how we define “unemployed,” we now have roughly 10 million people out of work. The reality is far worse. Another 3 million may have become so discouraged by their unrewarded efforts at job-hunting that they have dropped out of the labor force entirely — these people are not included in the officially unemployed statistic.

Then, there are another 7 million to 8 million who are currently employed but they may be working part time — when they want full-time work — or they may be receiving such low wages that they still depend upon various government assistance programs (and private sector initiatives) to survive economically. Many part-time workers, or poorly paid full-time workers, still have to obtain assistance from Medicaid, food stamps (SNAP), welfare, housing programs, private shelters and private food pantries.

Currently, and steadily, the country appears to be recovering — albeit somewhat tentatively. Approximately 6 million jobs have been restored or newly created since the meltdown. But with a total of about 21 million under- or unemployed or dropped-out adults and teens (over 18), the nation needs at least that many full- or part-time jobs to get everybody back to work. How fast is that going to happen?

That’s the backdrop to the congressional debate about whether or not to pass legislation to extend unemployment benefits.

Typically, across the country, any worker who is laid off (not for personal performance issues) receives about 26 weeks of unemployment benefits from the state. States vary somewhat. Massachusetts assists workers for 30 weeks and pays them an amount roughly equivalent to half their old weekly wages (but not more than a certain maximum).

After the financial crisis, with the huge increase in unemployment and the large shortfall in the number of available jobs, millions of working men and women — no matter how motivated — simply could not get hired. It was simple mathematics: There were far more job-seekers than jobs.

Consequently, in an effort to assist a workforce under real duress, and to put some stimulus money into the hands of people who would spend almost all of it, the federal government in 2008 instituted a program of unemployment benefits to supplement the state benefits. The federal program extended payments beyond the typical 26 weeks to up to 73 weeks (it was 99 weeks in 2009, 2010 and 2011).

The federal program has been reauthorized several times since 2008, but this past year, it expired on December 28. Immediately, 1.3 million unemployed workers were cut off from aid. Another 850,000 will lose their benefits by April. Ultimately, by the end of this year, 4.9 million people will be affected. And, ironically, because the unemployed will not have that money to spend in the economy, another 250,000 jobs may disappear as a result of the reduced consumer spending.

So, there are two good reasons for Congress to reinstate extended unemployment benefits: the direct assistance to the recipients and the positive ripple effect their spending will have on the economy.

Some opponents of any extension argue that recipients are made complacent by the payments and stop searching for work. The opponents cite the example of North Carolina cutting benefits six months ago from 99 weeks to just 19. The state saw an immediate drop in jobless claims. But it also saw an immediate increase in activity at area food banks. Furthermore, the state’s labor force contracted significantly. Investigators speculate that many job seekers moved out of state and many others simply gave up looking for work, thus no longer being recorded as officially unemployed.

And as is known, although undoubtedly there are some slackers on the benefit rolls, most people prefer to work and receive the meaning and sense of purpose that come with a job, as well as have the opportunity to advance and make more money than one can receive from unemployment.

Let’s not lose sight of the real and serious problem. We have a terrible shortage of jobs. For a good many years, people who cannot find jobs — because there aren’t enough jobs to go around — are going to need help.

Brian T. Watson is a Salem News columnist. Contact him at btwatson20@gmail.com.