Las Vegas Sun

September 4, 2015

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UNEMPLOYMENT:

Parties dig in for another debate over unemployment benefits

’Tis the season for holiday traditions, and in Washington, D.C., lawmakers will mark the month between Thanksgiving and Christmas with their annual rite of causing national panic as they debate whether to continue funding the emergency unemployment benefits adopted in 2008 to help jobless workers through the recession.

Most of the up to 99 weeks of unemployment benefits that laid-off job seekers are entitled to will expire at the end of the year absent action by Congress.

House Ways and Means Democrats — including Nevada Rep. Shelley Berkley — have started pushing for a one-year extension of all unemployment benefits. But Republicans have begun to push back, arguing the country can’t afford to keep budgeting for checks they say encourage people out of work to take their time getting back on the job.

The parties have debated their philosophies through many rounds, yet it hasn’t resulted in a lapse of more than a week or two.

This year though, the special debt supercommittee’s failure to agree on budget cuts, combined with signs the national economy is starting to recover, have bolstered the resolve of some Republicans — including some Nevada Republicans — to call for a scaling back.

“I am concerned when I talk to employers in the community who say they are offering jobs but the deal on unemployment is better,” Nevada. Rep. Mark Amodei told Las Vegas Sun reporter Anjeanette Damon during a taping of “To The Point” this week. “I’m inclined, depending on what’s in the bill, to say at some point in time you have to say, ‘I’m sorry, you can’t just keep extending it.’ And this could very well be it.”

The unemployment benefits system adopted in 2008 is divided into tiers. Most states begin with a baseline of 26 weeks of eligibility that can be extended in some states by up to 20 weeks in times of high unemployment.

The federal government then offers four tiers of emergency benefits: 20 weeks, 14 weeks, 13 weeks and six weeks, to be given successively. The first two levels — the 20- and 14-week chunks — are available to all workers; the third, 13-week tier is available to workers in states with a three-month average unemployment rate of at least 6 percent, and the final six-week tier is available to workers in states with a three-month average unemployment rate of at least 8.5 percent.

In October, Nevada’s unemployment rate was 13.4 percent; nationally, it’s 9 percent.

“The economics are so clear, the politics just mystify me,” said Heidi Shierholz, an economist at the liberal-leaning Economic Policy Institute. “This should be an absolute no-brainer.”

Shierholz believes it is too soon to scale back the unemployment benefits, even if nationwide, unemployment numbers are slowly improving.

“What you need is for unemployment insurance to last as long as it takes for someone who’s searching for a job to find a job,” Shierholz said.

“Over the last two years, we’ve only added enough jobs each month to keep up with the normal growth of the population; we haven’t started digging out of the hole,” she explained. “The unemployment rate has come down, but it’s been entirely due to people dropping out of the labor force. It hasn’t been due to us putting a bigger share of our working-age population back to work.”

But conservative economists argue that if job numbers have been lagging, it’s because unemployment insurance is perpetuating the problem.

“When you’re providing additional benefits, some of those unemployed people will remain unemployed for a little bit longer,” said Alex Brill, a research fellow in economics at the conservative American Enterprise Institute. “You want to distinguish between what the generosity of benefits is for someone who becomes unemployed and eligible tomorrow versus someone who’s maybe been unemployed the last two years ... Do we think that person needs (almost) two years of benefits, or do we think that the economy is likely to be better in two years for that person? ... We don’t need to be assuming they’re going to need two years of benefits.”

But this isn’t just an argument about labor dynamics; the debate will also involve tension over market economics and budget demands.

Things like unemployment insurance benefits and payroll tax cuts — a proposal President Barack Obama is pushing — “gets money into the hands of people who are very likely not going to have any choice but to spend it immediately,” Shierholz explained, and hence, help drive consumption in the economy.

“That (unemployment benefits) money is currently going to the unemployed worker, so it’s currently working to generate jobs. If that money goes away, we would lose half a million jobs right away,” she said. But even if there’s more bang per buck with unemployment benefits, it’s still money the government pays out, adding to the national debt.

“The failure of the supercommittee to find any spending reductions, tax increases and deficit reductions will affect the ability of Congress to continue to spend money on a program like (unemployment benefits) without finding a way to offset the cost,” Brill said.

Last week, Nevada Sen. Dean Heller filed an unemployment insurance bill to extend the full 99 weeks of benefits for another year, and pay for it by instructing the Obama administration to “determine and identify” where the country could pull $44 billion out of the budget.

The details of where to pull money to pay for benefits elsewhere is always the difficult part. But the supercommittee’s failure might help.

“There are buckets of money and savings that can be plucked out of the supercommittee’s deliberation, and used to offset other things,” Brill said. That money can be used to reduce the deficit or pay for other things, like unemployment benefits.

“There’ll be some who argue ‘just to cut ’em off.’ I think what will happen is they will pass a compromise that does extend the benefits but starts to curtail them,” Brill continued.

Gary Burtless, senior fellow in economic studies at the Brookings Institution, said that “In 2009 … I was cautious about the idea of extending benefits to 99 weeks, because there is a possibility that you’re not going to have enough money to keep on funding these 99 weeks of benefits.”

Still, that length of time puts “the United States exactly in the middle of ... rich industrialized countries.”

The duration of benefits should cover the length of time it might take for an unemployed worker to find a job: In Nevada, that’s about 35 weeks.

But that only counts workers who find a job during the 99 weeks they’re considered part of the labor pool. The average would rise dramatically if it included those counted as part of the “real” unemployment rate — a Labor Department measure that counts not only “active” workers, but also the total number of part- and full-time workers.

As of the end of September, that figure in Nevada was 23.3 percent — meaning there are an almost equal number of uncounted jobless workers as there are counted in the official unemployment statistics. And these workers have been unemployed for 100 weeks or more and are depending on the full 99 weeks of benefits that some say it’s time to curtail.

“Does anyone seriously think it’s going to be much easier to find a job in January 2012 than it was in January 2011 or January 2010? That’s the thing that is so disturbing, really — the job market has not improved enough that it is significantly easy enough for the unemployed and the long-term unemployed to find a job,” Burtless said.

Whenever Congress decides it’s time to scale back the unemployment safety net, there’s a difficult transition coming.

“Congress is going to face the gross unfairness that workers who had the good fortune to be laid off early in the recession got 99 weeks worth of benefits, and workers that got laid off early in the recovery would only get 26 weeks of benefits — or maybe only 39 weeks or maybe only 52 weeks of benefits, but at any rate, significantly less than you’re going to make available right now, even (if) it will be just as hard to find a job two years from today as right now.”

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