ANALYSIS: How Many Reasons Do You Need To Reform Unemployment Benefits?

When it comes looking at the reasons why U.S. unemployment benefit programs need reform, proponents of reform could simply add up the millions of Americans out of work for 26 weeks or longer. Now they can add one more: Sen. Jim Bunning.

The nation’s unemployment rate stands at a pernicious 9.7 percent, but even that doesn’t tell the worst of it because more than 40 percent of those jobless Americans have been out of work for 27 weeks or longer.

And, as there are signs that the employment picture may not improve soon for many of the unemployed, millions of Americans may be reliant on unemployment benefits for some time to come.

States administer their unemployment benefit programs, but it’s up to the federal government to extend benefits to those who have been without work for at least six months.

Congress has extended such long-term benefit four times so far since the recession began, most recently in December 2009.

Bunning (R-Ky.) reportedly agreed to a late deal to end his one-man blockade of legislation that would extend such benefits. But the fact that one lawmaker could for the better part of a week come between potentially millions of Americans and the benefits that they need to survive highlights the unreliability in the current system.

“Relying on Congress to extend benefits episodically to the long-term unemployed is not a good policy solution,” Jeffrey Wenger and Heather Boushey, analysts at the Center for American Progress in Washington, say in a research brief prepared prior to Bunning’s protest. “The United States is a large nation with a variety of different local labor markets, and Congress may not have the political will to act when only a few states are in dire straits. In future recessions, there may not be the votes in Congress to help the few trailing states.”

Wenger and Boushey has proposed reform for the unemployment benefits program, which is also threatening the budgets of many states around the country. They suggest using funds from the Troubled Asset Relief Program (TARP) — the name for the massive federal financial-rescue package put in place in 2008 — to help fund the unemployment insurance (UI) benefits program, including extended benefits.

“If the federal government took over the UI Trust Funds moving forward, they would no longer have to rely on states to adequately fund them. This would help the national economy in future recessions as benefits would flow out more quickly to localities with higher unemployment and longer unemployment durations,” the analysts say.

The nation apparently will need its extended unemployment benefits program to be in good health for some time to come.

If significant structural change in the economy results from the recession, many of the long-term unemployed may find their skills aren’t needed in the recovery work force, according to research from The Conference Board, an independent business membership and research association. This could result in a period where the unemployment rate remains relatively high until these individuals re-tool or find alternative employment matches for their skill sets, The Conference Board adds.

“The labor market complexity reflects people in transition,” says researcher Christopher Woock. “The high number of long-term unemployed and individuals working part-time for economic reasons, coupled with the likelihood that many employers remain uncertain that the economy is firmly on a recovery path, suggests we could be in for a long, slow labor market recovery.”

Meanwhile, a top official at the Federal Reserve warns the current jobs crisis could continue for another three years as businesses learn how to maintain output with reduced workforces.

“This process of implementing new efficiency gains may have only begun and we may be in store for further efficiency improvements and high productivity growth for some time. If so, the rate of job creation will be frustratingly slow,” says Federal Reserve Bank of San Francisco President Janet Yellen.

The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.

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One Response to ANALYSIS: How Many Reasons Do You Need To Reform Unemployment Benefits?

  1. TheCarCzar says:

    The country needs to offer a new EB Tier 5 for the high level of long-term unemployed until jobs surface once again. Contact your elected officials now. The alternative is chaos.