Far Too Soon To Pull the Plug on Emergency UI

Today’s employment report shows that California’s job market is slowly on the mend, but jobs remain scarce and forecasters anticipate that subpar job growth will keep the state’s unemployment rate at recession-like levels well into the second half of the decade. California gained a modest 6,600 jobs in November, and the state’s unemployment rate dropped by 0.4 percentage points to 11.3 percent – the third monthly decline in a row. Yet more than 2 million Californians remain out of work, including approximately 700,000 who report having searched for employment for at least a year. The odds of finding work are stacked against these long-term unemployed. Currently, US businesses only have enough job openings to employ one-quarter of the nation’s unemployed.

What’s worse is that many of the unemployed could be facing even longer periods without work. The Legislative Analyst’s Office (LAO) recently projected that job growth could be so weak over the next few years that the state’s unemployment rate could remain above 10 percent through 2014. That means that even three years from now, California’s jobless rate could be higher than it was during any past recession in recent history, including during the deep downturns of the early 1980s and early 1990s. The LAO also projects that by 2017, the state’s unemployment rate may only fall to 8.5 percent – well above what’s considered typical of a healthy job market.

With millions still out of work and robust job growth possibly many years off, now is not the time for Congress to slash federally funded Unemployment Insurance (UI) benefits for the long-term unemployed. Yet the House of Representatives passed a bill this week that would substantially reduce the number of weeks that UI benefits are available to workers who exhaust their regular state benefits, as well as make permanent changes to UI that would make it more difficult for workers who lose their jobs through no fault of their own to qualify for benefits. The US Department of Labor estimates that if the House bill is enacted, 3.3 million of the nation’s unemployed – including 584,000 Californians – would lose access to UI benefits in 2012. If Congress takes no action at all and allows emergency UI programs to expire at the end of the year, a total of 5.0 million Americans, including 715,000 Californians, would lose their benefits.

Prematurely cutting off emergency UI benefits makes little sense. Congress has never before pulled the plug on emergency UI when the nation’s unemployment rate is as high as it currently is. Doing so now would not only increase hardship for many families, but also pull substantial purchasing power out of the economy, costing additional jobs and setting the recovery back even further.

—Alissa Anderson