Law makers are closing in on approving an extension of federal unemployment-insurance benefits. The bill would provide an extra 14 weeks of benefits for people who've exhausted their benefits. Those who live in states where the unemployment rate is more than 8.5 percent would get up to 20 weeks of extended benefits.
It's tough to argue that extending unemployment benefits is a bad idea at a time when more than 15 million people are out of work. The extension would come at a time when as many as 7,000 people a day are exhausting their unemployment benefits.
But that doesn't stop some people from trying.
Most economists agree that extending benefits is good for the economy, because it does more than just help financially strapped families ride out a long-term job loss. How so? Unemployment benefits provide the greatest assistance to lower- and-middle-income households, ones that typically don't have a fat severance package or rainy-day savings to draw on. So these people are most likely to spend their extended benefits right away. According to a 2004 study by Mark Zandi, chief economist at Moody's Economy.com, "[Unemployment insurance] benefits support hard-pressed households that spend it as quickly as it is received."
Consumer spending has been key to the economy's fledgling recovery. (Consumer spending accounts for 70% of the nation's economy.) Fueled in large part by federal stimulus programs, such as "Cash for Clunkers" and the $8,000 first-time home-buyer tax credit, consumer spending rose over the summer months. But consumer spending slowed in September, raising fears that the recovery will stumble without more stimulus.
An extension in unemployment benefits might help. The Zandi study estimated that every $1 spent on extended benefits would increase the U.S. gross domestic product by $1.73. That's a whole lot of bank for the buck.
Or not.
The Heritage Foundation, an influential conservative think-tank in Washington, DC, has argued that extending unemployment insurance doesn't stimulate the economy at all. In a policy briefing , the Foundation called the Zandi study "flawed," noting that the government needs to borrow money to finance extended benefits. The individuals it borrows from then have less money to spend or invest elsewhere in the economy, offsetting the stimulus provided by benefits extension. And that loan must be repaid, so the government will either have to cut back on its own spending or take money out of consumers' pockets in the form of higher taxes.
The Foundation researchers also claimed that 50 cents of every dollar in extended benefits would go to pay for things the household would have paid for anyway, either with money from other household members working longer hours, or by dipping into savings. (They cite this study from the National Bureau of Economic Research.
The arguments for and against extending benefits both have some merit. The Zandi study is right on the money in terms of lower- and middle-income families needing to spend benefits right away -- it's a stretch to think these households are hoarding cash. But the Heritage Foundation has a point: The money to pay for extended benefits has to come from somewhere. More government stimulus will add to our economy-sucking public debt.
But I can't get on board the argument that individuals and families would have found the money to pay bills through other means without the extension. People can't work longer hours when employers are cutting back on overtime. As for rainy-day savings, if you've been out of work long enough to exhaust weekly benefits, it's likely any available emergency funds have already been tapped.
In fact, millions of households are well past the point when "getting rid of premium cable channels" or "eating out less" is enough to keep the lights on. Without extended benefits more families are going to be forced to cut back on real necessities, and they and the economy will suffer.
Instead, I would argue not only for extending benefits, but would urge lawmakers to tie the benefits to a far more-aggressive approach to job retraining. Too many people are waiting and hoping for the economy to recover and restore their jobs, not grasping that many of those jobs aren't coming back. Yes, it will mean borrowing more at a time when we as a nation are already maxing out our credit, but it's an investment that could reap huge returns if we help workers get the skills needed to find and fill the jobs in industries and entities that are hiring (health care, education, government, "green jobs," etc.).
Would you vote to extend unemployment-insurance benefits? Are you or someone you know relying on extended benefits to pay the bills? I'd love to hear your thoughts.
Terri Cullen is an award-winning financial journalist. She was one of the original team of editors who helped to launch The Wall Street Journal Online. Terri is also the author of "The Wall Street Journal. Complete Identity Theft Guidebook." Read her bio to learn more about her.
Blog made possible with support from the Corporation for Public Broadcasting.
Comments
Hopefully someone can explain for me.
The Senate has passed the extension and it now goes to the House for approval. This bill calls for 14 weeks with up to 20 weeks in States with unemployment rates of 8.5 percent or above. BUT.. The first and second extensions and full federal funding for the third extension are all set to expire after Dec. 31. This is the third extension correct? Funding for this extension runs out on Dec. 31 so how do you get 14 weeks (20 in some States) when there are only 7 weeks left before funding runs out? Is 1 + 1 not adding up to 2 here? Or, is this bill a forth extension but I never received a third one with my benefits depleted a month ago?
I live in Indiana if someone is able to answer my question.
"
Greenspan decreasing the interest rate when it was a must to increase them drastically. I can remember also when he said there were "frost" of a bubble in some areas, when the bubble was fully blown.
It was the Government who was not able to stop the Wall Street and Bank failure for not paying attention to what was happening. It was the SEC not paying attention that allowed 60 billions dollars to disappear in the hands of a Ponzi
"
Please don't feed the animals. Don't feed the Ponzi. Bingo! You nailed it.
Although hardly handsome the one headed monkey riding on the back of Greenish had two hands, neither controlling the other. Within the one hand was fiscal policy, but within the other was monetary policy. The greenish Dilemma was that he held only one of the monkey's hands. The wild card of fiscal policy remained within the hand controlled by the schizophrenic mind of 400 minds -- the mind of congressional personnel. Although 400 headed beast could have been the Jolly Greenish Giant to dump the payroll tax with increase in domestic oil tax, the Giant instead was controlled by another more insidious beast.
The MIC could tank employment by raising rates, or MIC could feed the Ponzi by dropping rates. What's a poor mother to do? What's a poor chairman to do? How could the MIC, Mother In Charge deal with the more insidious beast, The Beast of 1001 Heads? Don't feed the beast. Don't feed the lobbyist
!
Grazia,
شهرزاد
Call Me Joiner - The end result will be "put on a happy face" then business as usual continuing to slowly doom the US economy.
Well, there is an issue that is missing in all this. The moral roots of the case ...
The workers are jobless because of the government failure to stop the House Crisis at the beginning. I can remember our "beloved" Greenspan decreasing the interest rate when it was a must to increase them drastically. I can remember also when he said there were "frost" of a bubble in some areas, when the bubble was fully blown.
It was the Government who was not able to stop the Wall Street and Bank failure for not paying attention to what was happening. It was the SEC not paying attention that allowed 60 billions dollars to disappear in the hands of a Ponzi scheme. And it is still the Government who is delaying the recovery not allowing the Big Ones to fail and allowig the payment of big bonuses to the Big Guys while denying UNEMPLOYMENT EXTENSION to those affected by their negligence.
Where is the Change? What has the Government done so far but to benefit the few big guys?
Our Government is killing the Democracy!
im waiting for the extension,ive had to go to the city to pay some towards my housing and utilities ,im on food stamps now,i dont know how much longer ill be able to survive
David -- you are completely right. I wonder what message the government will get after all the votes are counted tonight? Will they think it's OK to keep piling on regulations, or will a voice of reason begin to break through?
I would like to say that i have exhausted my U.I.B. in the state of Rhode Island . I did nor receive the average 26 weeks of unemployment but instead , somehow i only had 14 weeks . Idid receive my extended benefits and also have exhausted them . I did look for work constantly and i had no luck at all . I did enter into a program through my states unemployment and its affiliate Network RI . This program does help in reeducation and helps pay partially for the school in which i enrolled in . The program i was excepted in is called W.I.A. , i was obligated to do many things to be excepted , and i did them in more than a timely manner . After 6 weeks of being in school is when i found out that i had exhausted all unemployment benefits . I cannot work a full time job due to the fact im in school full time and the program im in says i cannot work full time . There is no other financial relief that i qualify for . Finding a job 2 months ago was very difficult , finding a part time job at night i'am sure will be just as difficult if not worse . Never the less , i'am stuck . I do have bills and a child to support as just the same as everyone else . I figured being in the program i'am in , which is federal and state backed , there would be other financial options to help me , while enlisted through a retraining program . Instead of hoping and praying for the the legislature to pass the bill for another extended benefits , there is a possibility that i might have to stop going to school , in which i'am already obligated to pay what i've borrowed through loans for school . Now not only do i have no income but i'am in worse debt that i was already in . Hopefully i will be able to find something part time very shortly or everything i've tried to better myself will just be a waste of time and money . So tell me , how does this help my situation and im sure that im not the only person with these issues that have just suddenly arouse .
Carol, yes, the bill as it stands would provide 14 additional weeks for people exhausting their benefits by the end of the year (and an additional six weeks for those living in states where the unemployment rate is more than 8.5%).
But before you despair, please check with your own state to see if it has its own extended benefits program available.
Best,
Terri Cullen
I will run out of benefits on January 9, 2010. From what I'm reading only those running out by the end of the year will be eligible for the extension. Am I correct? Will I not be eligible??
*I'm in Indiana and other states may have different requirements.* With the last extension in order to receive extended benefits it came with a strict requirement. Looking for work was no longer good enough and you must submit at least three places, per week, where you applied. That's fine but these three places must have a current job opening and be actively hiring. Yes, in Indiana you must find and apply at three places, per week, that are actively hiring in order to receive EB. It indicates that Uncle Sam feels that jobs are a dime a dozen. To me that says "support your family on a fast food wage income". Shhh our government doesn't like to talk about being underemployed or the working poor.
The government says jobs of the future are in the service industry. What they don't tell you is why. And that is they have imposed such strict, expensive regulations on industries that it's too darn expensive to operate in the US and much cheaper to move their operations elsewhere or close. NAFTA ring a bell and why so many industries moved south? Why was it never revoked? The economy was just the straw that finally broke the back of many industries who were already struggling under these strict, expensive regulations. If the government would stop financially choking industries I don't feel job loses would have been so high and continue to rise. Just a little more common sense by our government and less people, like myself, would be needing this extension due to plant closure.
If you want some insight into what the younger generation thinks is "hardship", scroll down to The Intern's Fiscally Fit blog .
My last fed-ed extension ran out Aug.29 2009. The time lapsed for this new fed-ed extension to be passed is ridiculous.The EDD says I qualify for more assistance but our goverment has let the bill just sit while they worked on other issues.Like passing bills that have nothing to do with the unemployed getting help when they need it the most.Food stamps does not put gas in my tank,pay my car insurance,or daily needs to look for work. A taxpayer for over 45 years should be helped better than this. jbg
I am a professional who has been out of work for almost two years now. I have applied for not only career work but for minimum wage work with no success. The delay in approving the extended unemployment benefits makes no sense. If our legislators had even entry level business school education, they would be able to understand how keeping money in the hands of citizens keeps $'s flowing in the economy. Throwing money at the banks does NOTHING to stabilize the economy. Our country would have been better off to have distributed the "bank's stimulus" money equally to every American citizen. Had that happened earlier this year, our economy would have already turned around. If and/when the extended unemployment is approved, there needs to be a specific timeframe for when the money is distributed to the individuals. The last time extended benefits were approved by the federal government it took Florida almost five months to BEGIN to deliver that money to the claimants. That is ridiculous!
Have been off since Jan. 16 2008. In Ohio and worked in he car business. Nothing !!! Places are closing all around and this needs to happen for all of us. Seems to be a no brainer as the ones that are argueing this extension are all working. GO FIGURE
Terri,
I am in the Real Estate industry which has suffered immensely over the past 2-3 years. As a result, my income has become unreliable and I have not had a commission check in many months. This is not from a lack of trying, the market is in trouble. Because my unemployment benefits have expired I am faced with not paying my utilities and incurring late charges and possible disconnection. I exhausted my savings months ago and have tried to gain employment elsewhwere but live in a small community with no available work. This extension means that I can continue to have heat and electric and gas for my vehicle until something improves job wise or I sell some homes. I need this!
I too am 1 of the people waiting on the outcome of this extension....I would like to know what are they dragging their feet about on this???...this is a no brainer as to what needs to be done. I have been unemployed since 2007 and have bills way beyond due...does any1 know of any links as to track what is going on as far as what is going on with this vote?...thanx in advance.
In California, and apply constantly with companies through all the different job sites. Nothing comes from this!! I will continue looking for work.
Also, I have written my two Senators, Boxer and Feinstein, along with, Reid, Polosi, and the President. Not only have I written them, but those Senators on the GOP side that continue to stall/delay the extension. Everyone out there waiting for this extension should be writing their Senators, Congressman, Polosi, Reid, and the President. If you don't know who they are, for God sake, use a search engine and find them. Go to their website, and give them an earfull, if you haven't done this yet. Also, remind them that if there is not more done to stimulate jobs in this country, we will stay unemployed, and will continue to need assistance. They all except email.. so get onto their websites and WRITE!!
Wow, the story on the ground sounds so bad for some people. Is the government really going to let people starve en masse after spending so much money on much less important things?
I'm still working but earning much less, too little now to pay all the bills. I think I should have gone for unemployment while my income was still high. My rainy day fund is good for a couple more years, though. I find myself hesitating to donate more to feed the hungry because I'm afraid I'll need it to feed myself later, and I feel disgusted with myself. Then I spend time around people who still think nothing about spending more on a single meal than I spend in a week, but don't even consider donating, and I try not to look offended because I hope they might help me with some more work.
I have been out of work for over 16 months now. My job was eliminated. I had over 22 years in IT at a local hospital in OH. I have been searching for another job in IT(Information Technology)or anything close to what I use to make. No go. I have used up all my savings, 401k, severance pay, stocks etc. Unemployment benefits are my life line. I have used up 59 weeks of this and got a 20 wk extension from OH. When this runs out foreclosure is next. My wife's hrs have been cut also. It would be nice if the US gov't would help people like me in this position and grant another round of extended UC. I would love to be working now and never foreseen this mess coming. The gov't bailed out the greedy bankers and wallstreeters and they just pocket the money for themselves for the most part. God bless the honest working class folks and may things get better.
The financial companies that devised risky instruments that brought down the economies of not just this nation but the entire world deserve to be rescued with billions of tax payer dollars and the greedy executives of these same corporations are rewarding themselves with hundreds of millions in bonus, but the tax payers who lost their jobs and are in financial difficulty do not deserve a few hundred dollars per week of unemployment benefit just to get pass this difficult time??!! Many people's lives and careers are irreparably damaged negatively through no fault of their own. Where is justice?!
Yes!! I have a college degree and over 15 years professional experience with two companies. I have not needed unemployment benefits until 2+ years ago when my position and many others were eliminated. Our family has exhausted our savings and 401k. This is a new economy and we all need to survive without being forced to lose our homes and not being able to feed our families!!
TRYING
I am sorry to hear all the unemployment stories; my family has out-of-work stories too. So now think, where are we looking for work? In the private sector. Where are our state and federal governments looking to raise money for all these many new programs and entitlements? The private sector. So is it any wonder that businesses can't hire new workers when they are being taxed and regulated to the point where a new hire is too risky a liability?
I can relate to every one's comment i have been unemployed since 10/2007 I'm 40 years old and worked in a union environment most of my life was laid off and haven't been recalled anywhere i don't think i can ever recall it being this bad i went from a middle class income to nothing i mean nothing my benefits ran out the last of Aug 2009 i have lost my place to live and have been bouncing back and forth between family members to live and even they are having it rough to i have sold everything i could possible sell and have taken a huge loss on everything just to have gas to get around and fill out applications and to try and eat i have eaten ham sandwich's everyday for two weeks and I'm thankful for that they need to retroactive the unemployment my credit has gone bad now and i have an eviction filing on my record and owe the utility company money on bills that have been shut off i don't think i can get a place now with the shape my credit is in Then there is my child support here we go i pay $173.00 a week now don't get me wrong i love my kid's to death and it does not bother me to support my kid's but this money has ran out and now their mother is struggling with her bills as well i was drawing 462.00 a week they take 10% out for taxes and the 173.00 a week for child support and that leaves me with 244.00 a week plus the stimulus is 25.00 taxes out on that and it leaves 22.00 so 266.00 a week to try and live on it was falling apart under me then when it ran out they jerked the rug the rest of the way I'm thousands and thousands behind on support always in court and the first thing they want to do is put you in jail not sounding to bad right now 3 meals a day and a roof over my head but I don't want to go out that way so i try everyday with what i have left to try with job searching is so bad the worst part is the background check's my record isn't that bad but enough to many employers to tell me no left and right I'm not a person who does or sells drugs or a murderer or rapist or a thief and i payed my debt to society and allot was when i was still young and dumb I'm still paying for it not fair at all something has to be done about that this homeland security has gone a little overboard in this field enough is enough i just want to be able to live a normal life and have the American dream like everybody else I just want to work and pay my bill's and taxes like anybody else does i don't like a hand out but am thankful it is there I'm perfectly capable of working but this is getting old being told your background check has failed you sorry for being so long just venting
I like alot of you have been unemployed since March of 08. I honestly spend time looking for a job everyday. At first my expectations were high but a year and half later I feel like I'm slowly drowning. Its makes me so mad that we can finance a winless war but we can't take of our own people. Something is so wrong about this!!!
Lost my job 3-08 husband died 7-08 my claim ended 9-29-09 and it doesn't get any better then this.
Lost my job 3-08 husband died 7-08 my claim ended 9-29-09 and it doesn't get any better then this.
Plan Administrator: I am on RSDI and yes we got a 5.8 increase 01/09 and will not get one this year although everything else has and will go up associated with gas, electric, medicare. prescriptions and etc. So how do you figure the $250 dollar stimulus for us is bad and would be better spent on the unemployment extension? I live off 800.00 a month and worked 22 years before getting injured! I don't have enough to keep my utilities and rent paid now and wouldn't then! I am praying and watching the unemployment extension praying it passes so my brother doesn't loose his home. We all are sinking in the same boat right now!
I can relate to the person out of work since 2007. I have been too... I was in mortgage servicing.. it went away over night. Now I am re-training for medical billing and codeing. The unemployment helps me pay the tuition and books for the class so hopefully I will find a job in this field. I'm 61 soon too young for social security so I have to work. People can say oh she has no kids anymore but I do have an 81 year old Mother I care for... everyone has a story and they are all sad and true... we all need the unemployment to get thru this. I for one will not forget the lousy Republicans playing with this issue.
I have been unemployed since 9/07. The company finally closed 7/09. I had a $40,000 a year job. My unemployment ended the first week of Oct. I am literally sick because I don't know how I am going to survive. The food in the pantry and freezer is diminishing and I am counting the days until my phone and utilities are shut off. I live within my means and always have. I shop at goodwill, go to auctions, use coupons and never pay full price. I have a Master's degree and have not been able to find a job. I used my 401K to help get by last year and have no other resources to use. I had to use my credit cards to buy food and personal care items and now 2 of my 3 credit cards have been closed by the banks that were baled out. I was new late on any payments nor did I max them out. I live in a rural area and have to travel 20 miles one way to get to a town of any size. I have sent out over 500 resumes and applications with only one interview and they ended up promoting within. I look for jobs anywhere and apply to places 2-3 hours away. I have looked in other states. This summer I worked at a local drive in for minimum wage. Business was slow there. I need this extension, I don't want it, I need it. It's bad out here.
I'd much rather see extending the u/c benefits than giving $250 to each Social Security recipient who incidentally, got a 5.8% increase on 1/1/09.
Dan, good eye! My apologies, readers, that is a typo and Dan is correct. The number is 7,000 people exhausting their unemployment benefits each day -- not 700. (We'll fix that in the post shortly.)
I'd like to address the common misunderstanding among unemployed workers who believe that the proposed benefits extension will be retroactive. As currently written, it isn't. There won't be any lump sums handed out. Instead, each individual will have to file a new claim in order to receive the extended benefits on a weekly basis going forward.
I appreciate all your comments!
Best,
Terri
i've been sick waiting to hear about the verdict and for the lawmakers to sign the dotted line for he extention.
i've been out of work since 2/08, i've worked for 25 years with a great income. There are no jobs out there. the system really needs to change and open up on the job training for those of us who don't have experience. companies should not discriminate against age which is a major factor and having a college degree. there are numerous incidents where i can do a much better job then the people holding them. because one doesn't have experience doesn't mean one can't do the job.
industries and companies need to look out of the box and be creative.
if i don't get extended benefits the next place for me to live is the street. no one deserves that.
My husband and I are both laid off. My benefits run out the middle of this month. We use this money to pay our bills. It does not give us big money for us to live high on the hog. It just barely pays bills and there is not much left over for food. Without unemployment we will loose our home.
I think the congress needs to come out of their offices, fancy cars and big houses and see the real world. We are like everyone else. We would love to have a job to go to. We were at our jobs 13 and 15 years. We pay our taxes and fees. We are being punished by greedy people higher up that don't care about us little ones. The bankers gave us these loans knowing we would not be able to pay them. They should be punished.
The low class people should have been given the money to bail out the economy, not the bankers! We would have put the money back into the system.
The Congress are suppose to be for we the people, but they have blinders on.
I am currently on unemployment and yes all reserves have been used. There are very few dollars between me and not knowing what is even possible. I have aggressively looked for a job to replace one of two jobs and now the income from both jobs is gone and so is everything else.
Will the extension fix it? Probably not fix it but give me a little more time for a job to open. I can't stand long hours so factory work and fast food are not possible but anything else I can find I would do.
I used to be in the middle class part of the population and now, well, I don't think I am even on the charts.
Thanks for allowing me to comment.
I am very dissapointed with the senators who have stalled and dragged their feet in responding appropiately and in a timely manner concerning unemployment.
It should not have come to this. We need to vote out any and all senators who take the people's matters and well being lightly.
This way they can join us in the struggle that many of us find ourselves in.
Ladies and Gentlemen,let's get with the program !
Please, for the sake of providing for our children and ourselves.
I have critical prescriptions that need to be refilled but have to money or options to get-bye.
Let alone I'm behind on my rent and car payment which are currently in the critical stages of past due !!
I am very dissapointed with the senators who have stalled and dragged their feet in responding appropiately and in a timely manner concerning unemployment.
It should not have come to this. We need to vote out any and all senators who take the people's matters and well being lightly.
This way they can join us in the struggle that many of us find ourselves in.
Ladies and Gentlemen,let's get with the program !
Please, for the sake of providing for our children and ourselves.
I have critical prescriptions that need to be refilled but have to money or options to get-bye.
Let alone I'm behind on my rent and car payment which are currently in the critical stages of past due !!
I've been on unemployment benefits since 03/08 and I'd rather be working but this money has helped me pay my bills and help my husband financially. I've been without unemployment benefits since 09/09 and if that extension doesn't get passed soon alot of my bills will get shut off and I don't want that at all so I hope I get get the extension soon and hopefully They give me the money the owe me since 09/12/09 till now (retroacive) because my bills are piling up fast.
My husband and I have already exhausted our benefits. We have already lost our home. We already used up my 401k. We have been unemployed/underemployed for over three years. You guessed it, we live in rural northern Michigan. I received only one email communication to the 100's of jobs that I have applied for. It said that I was not qualified to do housekeeping at a YMCA camp. I have infact, been the top salesperson for the company I last worked for in the state. I have managed convenience stores. I live in a house and clean my own toilet. How am I not qualified to be a housekeeper? Many think of Michigan and think only of Detroit. Our own legislature only thinks of Detroit. We are renting a home that was purchased last year for $16,000. Yes, it is a shit-hole. We are doing work on the house to help offset some of the rent. I am currently an on-call lunch lady. I have written my congressmen and received no response. My husband and I would spend the money today if an extension was granted. We would spend it on our rent, our electric bill, our heat bill and groceries. Those are the luxuries of our life. Going out to eat, sure would like some Red Lobster, but, it is 30 miles to the nearest one and I dont have the gas money to get there or the money to eat there if I did. Do you think they would let me clean their toilet for the luxury of a meal?
The number is 7000 a day.
Lawmakers need to keep in mind that the average
lower income family has no money in the bank.
The only money the average lower income person has is in their 401-K account. Unfortunately, if you tap into any of this money it must be reported on your initial or weekly unemployment claim. Tapping into these funds makes you ineligible for unemployment benefits. Something you don't ever hear on the 6:00 news.
it seems like the most pertinent questions to people who are waiting for extended benefits is ..as of today what are the next steps to get this bill passed , when will benefits actually start, and will they be paying benefits retroctively. can anybody answer those 3 things? Please!
If I had money to spend, I wouldn't need unemployment. My husband's company is about to go to a 4 day work week (normally 6 sometimes 7). We have depleted our savings and have no idea where will get money for anything, including food. Going out to eat is only a dream to us now. I have applied to so many jobs. Mcdonald's hasn't even called!No wonder because I wouldn't be able to eat there anyways. So the next time anyone says use our rainy day funds maybe should be moving to a rain forest!