Tuesday, February 12, 2013

States smack workers by curtailing jobless benefits, but don't you dare call it class warfare

Chart showing January 2013 level of people unemployed for more than 27 weeks. This chart from Calculated Risk shows 4.7 million Americans have been unemployed for 27 weeks or more. Republicans in several states have reduced unemployment benefits to 20 weeks or fewer. Given that practically everyone who isn't in the top economic one percent of the population knows someone or is someone who was or is out of work as a consequence of the Great Recession, you might think there would be a bit more empathy when it comes to jobless benefits.

But that would require forgetting that the one percenters and one-percenter philosophy are making the laws. Consequently, despite emergency jobless benefits having been renewed at the federal level seven times since the recession began in December 2007, seven states have now cut the number of weeks that out-of-work citizens can collect these benefits. Since the 1950s, almost every state had provided 26 weeks of unemployment benefits to eligible workers. That was a standard endorsed by the Advisory Council on Unemployment Compensation, jointly appointed by George H.W. Bush and Bill Clinton. No more.

As a consequence of the cuts, jobless Americans in at least seven states will see their potential state benefits cut to 25 or 20 or even 18 weeks this year. And because federal emergency benefits are determined as a percentage of state benefits, the jobless in those states will get hit with a double whammy, boosting their potential loss as high as 14 weeks.

Other states are also pondering the same. For the unemployed in the states that have already taken action, the cuts can mean an annual loss of thousands of dollars, for example, more than $5,000 in Georgia where duration of benefits this year is just 18 weeks. The other states that have made cuts, so far: South Carolina, Michigan, Florida, Arkansas, Illinois and Missouri. North Carolina legislators are thinking about it.

Mike Evangelist at the National Employment Law Project explains the infuriating details of how this came to be:

The rationale for undermining the single most important lifeline for out-of-work Americans, during the worst downturn in recent history, is the poor financial condition of the state UI trust funds that finance the program. Indeed, state trust funds have never been in worse shape. But this reality has little to do with the alleged 'generosity' of UI benefit levels, which have remained relatively flat over recent
decades, and everything to do with the fact that state legislatures reduced employer UI taxes to unprecedented lows over the years leading up to the Great Recession.

Lawmakers in these predominately red states were not about to let a crisis (even a manufactured one) go to waste. Rather than take a balanced approach'a mix of additional tax revenues and benefit freezes'to restore state UI trust funds, these states chose instead to make permanent cuts to their UI programs. The purpose of these cuts is simple: pay a lesser amount of UI benefits, to a smaller share of unemployed workers, for a shorter period of time.

The consequences can be devastating. And not just to the jobless but to those who depend on the spending those jobless people do because of those benefits. Cuts of thousands of benefit dollars mean that out-of-work Americans will not be able to spend that money at local businesses or pay their rent or mortgages. That adds to the profound damage already exacted on the economy. Please continue reading about the harm that jobless benefit cuts will cause.

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