The Senate initiated a debate yesterday over the extension of unemployment benefits, which expired for more than 5 million people around the country last month. These are people who have been out of work for more than 26 weeks. Last year, Congress passed an extension of benefits up to 99 weeks for states hardest hit by the recession. This year, however, Congress failed to pass an extension before it recessed for the Memorial Day weekend holiday.
The Labor Department’s disappointing jobs report, released last Friday, which showed that the private sector only added 41,000 jobs in May (far short of the 150,000 jobs that economists had forecasted) only underscores the tough conditions still confronting many Americans who are looking for work.
States around the country are left grappling with how to help the ranks of long–term unemployed citizens. In California, more than 800,000 residents have been out of work for 27 weeks. As Tammerlin Drummond reminds us in this editorial for the Oakland Tribune, “We haven’t seen these kinds of extended, chronic levels of joblessness since the Great Depression.” Frustrated by those in Congress who argued against passing the unemployment benefits extension, Drummond writes, “Congress had no problem, however, approving another $60 billion for the wars.”
There is a lot of anger and frustration out there — but there may be a bright spot.
For some, the silver lining of these historic rates of unemployment may be found in the growth of small businesses. The Kauffman Foundation recently released a report that showed a historic growth in entrepreneurial activity for 2009. “Business start-ups reached their highest level in 14 years – even exceeding the number of start-ups during the peak 1999 to 2000 technology boom.”
Those are impressive numbers, considering the tightened credit markets, which has meant greater restrictions for the borrowing public. The other surprising aspect to this report is just who these new entrepreneurs are. Instead of young tech savvy whippersnappers, most of these entrepreneurs are 35-to-44-year-olds followed by people ages 55 to 64.
But Robert Reich, former labor secretary under President Clinton, cautioned that these numbers don’t necessarily tell the whole story. He writes that many of these new “entrepreneurs” were recently forced into the ranks of the self employed after being laid off. For Reich, “it’s important to distinguish between entrepreneurial zeal and self-employed desperation.”
Reich proposes that Congress create safeguards to protect this new class of workers. Rather than just offer small business incentives, he urges the creation of new programs that help the growing ranks of the self-employed gain access to group health plans and retirement accounts.
We’ll see if Congress gets the message. But first things first: dealing with those that are still unemployed. This week, Congress is expected to pass an unemployment extension retroactively, and those 5 million people could get their benefits back. But without the creation of more jobs, Congress will face yet another debate about the extension of unemployment benefits in the near future.