How to track the lost unemployment dollars

December 28, 2013 at 12:00 AM EDT
Extended unemployment benefits expire for some 1.3 million Americans after Congress fails to extend a recession-era program that steps in after state benefit limits are reached. Brenda Cronin has been covering the story for The Wall Street Journal.

HARI SREENIVASAN: For more about today’s cut to unemployment insurance benefits, we’re joined now by Brenda Cronin. She has been covering this story for The Wall Street Journal. And wrote about it in today’s newspaper. So how significant will the impact be? Let’s first talk about the people who are getting these checks. 

BRENDA CRONIN: Sure. Well, there are two ways to look at this. You can look at the overall macroeconomic impact, which many economists tell me will be negligible. It will be maybe .2 percentage points off the expected say 2 -2.5 percent growth that we’ll see in the first quarter of 2014. However, if you are part of the 1.3 million people who have just seen your benefits cut today, this could be a cataclysmic effect. The benefit itself averages out to about $300 a week. The expectation is that that is going to essentials such as groceries, pharmacies, gas. And without that that will mean an enormous change in life for the people who have been receiving this benefit. 

HARI SREENIVASAN: So one of the concerns for conservatives is that this is going to create almost a crutch for people and they should go out and try to find a job if it’s twenty six weeks or it’s ninety nine weeks that they’ve been on. How much more difficult or how difficult is it today to find a job today verses five years ago, ten years ago? 

BRENDA CRONIN: Well, it’s certainly harder today than it was ten years ago. There are basically 2.97 unemployed people for every opening so that is down from the almost six people there were for every opening during the depths of the recession and its aftermath. However, that is still – those are still rather difficult odds for anyone looking for a job. I’ll also point out that all research points that the longer one is looking for a job, the harder it is to find one for a host of reasons. Among them are the notions that one’s skills could atrophy a bit, but even more persuasive is that having a long stretch of unemployment often tends to be a red flag for many hirers. So the people who have seen their benefits cut now already have exhausted their state benefits which on average are about 26 weeks. So we’ll say six months of the year. They are already considered long term unemployed. They have then moved to the rolls of federal assistance emergency unemployment compensation program so they are already out of work for some time. So without this benefit they will have to continue a job search without any assistance. 

HARI SREENIVASAN: OK. So let’s talk about going forward this is supposed to be one of the first items on the agenda for congress. What’s the likelihood that it actually gets through? 

BRENDA CRONIN: That’s very hard to tell. It’s certainly on the agenda. Senator Reed has scheduled a discussion of this bill to extend the program retroactively by three months. That would bring it through – payments through March 2014. There certainly is precedent for a retroactive extension. The program which was begun 2008 has been extended more than ten times obviously. And the most recent extension obviously was from December ‘12 through December ‘13 so this did not come as an enormous surprise – the expiration. Many jobless people with whom I spoke were hoping for a renewal in the budget package that was passed on December 18th. That didn’t happen. Instead many republicans said we would like to see off-setting cuts and that didn’t happen in the budget package. This three month possible extension would allow lawmakers to maybe tweak the program to a) perhaps find off-setting cuts and b) to perhaps tweak it so it is not as generous as it was. As far as passage, there’s going to be a discussion and a vote in the Senate we expect on the sixth or the seventh, and the House is perhaps a different matter. Some Republicans do indeed favor it but not all. 

HARI SREENIVASAN: Brenda Cronin from The Wall Street Journal, thanks so much. 

BRENDA CRONIN: Thank you for having me.