On the Path to Economic Recovery: Extended Unemployment Benefits

October 19th, 2009 | Courtney Chappell

Although it is encouraging to see that the Dow Jones Industrial Index hit 10,000 this week, unemployment in this country continues to look bleak.  The September national unemployment rate shot up to 9.8%, and a record 5 million people have been unemployed for six months or longer.  These workers are now competing for a very limited number of available jobs, a ratio of 1 to 6.  If the Dow is in fact a reliable indicator of an economic rebound, why hasn’t the unemployment rate followed suit and leveled out or decreased?  Economists predict that unemployment will continue to remain high throughout 2010 – and even 2011 – at which time we will see more promising signs of recovery.  Until then, however, according to the National Employment Law Project (NELP), an estimated 1.4 million jobless workers will lose their unemployment benefits by the end of 2009.

The purpose of the unemployment insurance (UI) system is to prevent workers who lose their jobs through no fault of their own from slipping into poverty.  By temporarily filling the income gap for families while they search for work, UI serves as a critically important safety net.  Although the weekly benefit amount generally replaces only about one-third of a worker’s weekly earning, those checks can stabilize a household and help families cover their basic needs.

Congress is currently debating legislation that will extend benefits to workers who are struggling during this economic downturn.  Last month, the House passed a bill that would extend UI by 13 weeks, but it would apply only to those jobless workers who live in states with unemployment rates higher than 8.5%.  The Senate has likewise introduced legislation, but it is broader in scope.  The Senate bill would provide 14-20 weeks of additional benefits to jobless workers in all states.  Although advocates originally expected the bill to pass the Senate rather quickly, opposition has been raised regarding how these additional weeks will be paid, ultimately stalling any movement.

Any extension of benefits will no doubt help jobless workers in D.C.  The city’s unemployment rate is over 11%, and even higher in Wards 7 (19%) and 8 (27%), two of the city’s poorest neighborhoods.  According to NELP, by the end of 2009, approximately 4,700 District workers will have exhausted their federal extensions.

The D.C. Employment Justice Center, in collaboration with its community partners, has been working to ensure that all available stimulus money under the American Recovery and Reinvestment Act (ARRA) will make its way into the pockets of District workers.  Specifically, D.C. is entitled to receive $27 million of federal funding as incentive payment for modernizing its UI system.  Because the District adopted the alternative base period (ABP) in 2002, it has already received $9 million of this funding from the Department of Labor.  In order for the District to qualify for the remaining incentive payments, it must implement, at a minimum, two additional reforms and submit a second application to the Department by August 22, 2011.  Emergency legislation was introduced and passed in July 2009 that included two such reforms: a dependent allowance and an extension of UI to those enrolled in approved training.

Permanent legislation must still be passed in order for D.C. to receive the remaining stimulus funding.  But even this will not be enough.  In order to address the record rate of joblessness, the significant percentage of workers exhausting benefits, and the inadequate weekly benefit amount, evidenced by the fact that over 50% of UI recipients receive the maximum amount, the District must maximize the scope and impact of the $27 million federal funding to which it is entitled.  It can do so by also increasing the maximum weekly benefit amount by $20; expanding eligibility to those who leave their jobs to care for a sick family member or to relocate with their spouse/domestic partner; and extending the time in which an individual may file an appeal if he/she is denied UI.  These changes will help thousands of District workers and families as they continue to look for long-term employment.  Specifically, $10 million will make its way into the pockets of approximately 22,000 struggling workers.

If the federal government steps in to extend benefits for an additional 14-20 weeks under the Senate bill, all of the District’s reforms could be funded with stimulus money for 2 ½ years, and employer taxes would not increase.  Other states are no doubt in a similar situation – with the federal government footing the bill for up to 20 extra weeks, states can maximize the impact of their stimulus funding by changing their UI programs beyond the minimum requirements prescribed by the Department of Labor, and thereby provide much needed relief to their residents.  Two and a half years is a significant amount of time to feel the impact of the ARRA and create real economic opportunities for struggling communities.

With more money in the hands of consumers, more dollars will circulate throughout the economy, the stock market will continue to steadily rise, employers will regain their confidence, and the unemployment rate should eventually fall.  Congress’ decision to provide extended unemployment benefits is a critical step in helping the economy rebound, and will help ensure that the Dow’s resurgence this week is a truly promising long-term sign of the nation’s recovery, rather than a single snapshot of Wall Street.

About the Author: Courtney Chappell is the Advocacy Manager at EJC.  Prior to joining EJC, she was an associate at James & Hoffman, P.C., where she represented unions and individual employees in all matters relating to labor and employment law. As the first Policy & Programs Director at the National Asian Pacific American Women’s Forum, Courtney spearheaded the organization’s reproductive justice program and developed a multi-pronged action agenda that included lobbying, grassroots organizing, and public education campaigns.  Her achievements included coordinating a national lobby day relating to immigration reform, and convening a national coalition of women’s rights, immigrant rights, and reproductive rights organizations to focus on the intersection of health care and immigration.  She similarly engaged in policy advocacy as a fellow at the Mexican American Legal Defense and Educational Fund after graduating from law school. Courtney graduated magna cum laude from the American University Washington College of Law, where she was a student attorney in the domestic violence clinic and interned for the U.S. Department of Justice, Civil Rights Division, the EEOC, and the ACLU. She was also a staff member of the American University Law Review and volunteer intake counselor at the Asian Pacific American Legal Resource Center and the Domestic Violence Intake Center.  Courtney has served on the boards of the Third Wave Foundation and the Asian/Pacific Islander Domestic Violence Resource Project.  She is a recipient of a New Voices Fellowship and a Georgetown Women’s Law and Public Policy Fellowship.

Related Posts:

• December 16, 2009 -- Unemployment Q & A’s
• February 5, 2010 -- Danger: Falling Middle Class
• November 6, 2009 -- House Set to Act Fast Now that Senate Finally Passed Jobless Aid Extension
• October 20, 2009 -- The Chamber of Commerce’s Jobs Deception Campaign
• September 22, 2009 -- Congress Moves to Extend Unemployment Insurance to Hard-Hit States

Tags: American Recovery and Reinvestment Act, ARRA, Courtney Chappell, job search, Jobs, National Employment Law Project, NELP, unemployment, unemployment insurance

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