Sunday, February 21, 2010

Millions Set to Lose Unemployment Benefits as Economy Fails to Create Jobs

According to the National Employment Law Project, nearly 1.2 million Americans will lose their unemployment benefits next month unless Congress steps in to extend the filing deadline. By July, that number jumps to almost 5 million.

Under current law, unemployed Americans have access to 26 weeks of state-sponsored insurance benefits. But due to the Great Recession, the federal government has initiated four separate tiers of emergency benefits that can extend the benefits period up to 99 weeks.

However, recipients must exhaust their current benefits before filing for the next tier. Yet, the filing deadline for all tiers is at the end of February. As a result, nearly 1.2 million Americans will either not be able to apply for federal assistance or unable enter the next federal tier.

If Congress doesn't act immediately — with money it doesn't even have — all of these Americans will face an even greater crisis.

The Labor Department projects that eight million Americans will exhaust their regular 26 weeks of unemployment benefits in 2010.

Yet, the cost of extending unemployment benefits to the federal government and the states will be burdensome, and require taking on even further debt.

According to AP, the costs of another extension of unemployment benefits will reach $100 billion. The estimated price tag includes the costs of extending unemployment benefits through 2010 for those who have been unemployed for more than six months, as well as costs to provide subsidies to assist in paying health insurance premiums.

The White House estimated the cost of unemployment compensation to exceed $140 billion for fiscal 2010, which began in October.

Republican demands for tax cuts directed toward businesses that hire new employees this year will only shortchange an already broke Treasury Department and reeling Social Security Administration.

Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. Collectively, states are projected to run a $57 billion deficit in the program in 2010 alone.

The federal government projects that 40 state programs will go broke within two years and need $90 billion in loans to keep issuing benefit checks.

Of particular concern, a total of 6.3 million Americans have been unemployed for at least six months, the largest number since the government began keeping track in 1948. That's more than twice as many as in the early '80s recession.

Collectively, nearly 16 million Americans remain jobless. That number doesn't include those who have lost unemployment benefits and are no longer counted. Nor does it count those who have part-time jobs but want full-time work.

The unfortunate reality is that job creation has been slowing for decades.

According to the Economic Cycle Research Institute, during periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year.

But during expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.

Despite this reality, the government says that 1.3 million jobs needed to be created every year from 2006-2016 just to keep up with the growing labor force.

Yet, more than 8 million jobs have been lost during the Great Recession, meaning that job creation for the previous decade was actually negative.

That's a very deep hole to work out of.

Even if the nation could add 2.15 million private-sector jobs per year starting in January 2010, it would need to maintain this pace for more than 7 straight years (7.63 years), or until August 2017, to eliminate the current jobs deficit.

That seems highly unlikely. Sadly, our nation's unemployment problem will be with us for many years to come.

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