Published 10:54 p.m., Wednesday, November 28, 2012
Talk about a hard landing: About 2 million Americans, including 400,000 in California, will abruptly lose their unemployment benefits after December unless Congress votes to continue federal funding for extended benefits.
This part of the “fiscal cliff” has received less attention than tax increases and other spending cuts scheduled to take effect Jan. 1, but it’s well known to people like Suzanne Schellenberg of San Francisco. The 53-year-old graphic artist has been cycling between contract and freelance jobs and unemployment benefits for almost four years.
“It’s a crappy way to live, but (unemployment insurance) is a safety net I would be in very bad shape without,” she said. “This is the first time there is a fairly good chance there will be no safety net when state unemployment insurance runs out.”
During recessions, the federal government pays states to provide additional jobless benefits to people who exhaust their regular state benefits, which typically last up to six months.
About 2.1 million of the 5 million Americans receiving jobless benefits are on a federal extension that will end after Dec. 29, even if they have weeks remaining in their federal claim, according to Maurice Emsellem of the National Employment Law Project.
“It’s a hard cutoff,” he said. “There is no phaseout,” like there would have been every other time the program was in danger of extinction.
Congress has renewed extended benefits 10 times since the current round started in June 2008. At its peak, the program provided up to 73 weeks of benefits (99 weeks if you include state benefits), but now it provides only 14 to 47 weeks, depending on the state’s unemployment rate. In California, the maximum is 47 (73 including state benefits).
The maximum benefit has come down because it shrinks automatically when a state’s unemployment rate falls, but also because Congress trimmed it the last time it renewed the program, in February.
In addition to those losing extended benefits at year’s end, another 1 million jobless whose state benefits run out in the first quarter of 2013 will not qualify for any federal benefits unless they are extended.
When the program started, the national unemployment rate was 5.6 percent. After peaking at 10 percent in October 2009, it fell to 7.9 percent last month.
Over the past 60 years, the highest unemployment rate at which federal benefits have been cut off was 7.2 percent in March 1985.
Andrew Biggs, a resident scholar with the American Enterprise Institute, said extending federal benefits for people who “really, really can’t get a job” is the “humanitarian thing to do and may help the economy,” since most of them will spend their benefits immediately.
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