Texas Insider Report: DALLAS Texas In 2009 Congress extended jobless benefits to 99 weeks the longest period in U.S. history. Those payments were meant to help unemployed workers get through a tough recession while shoring up a faltering economy. Was it a wise approach? And with extended benefits expiring at years end should compensation be prolonged again?
- State and federal programs will pay $129.5 billion this year in jobless benefits according to Labor Department actuaries.
- Those payments provide roughly 50 percent of lost wages.
- Nearly all that cash reenters the economy quickly as recipients pay for food clothing or housing.
- For that reason jobless benefits have long been thought of as one of the most efficient ways to prevent consumer spending from collapsing during a slump.
Unfortunately the 99-week experiment hasnt been so successful in helping people get reemployed.
- Drawn-out benefits have caused job hunts to stretch out by almost a month -- with no greater guarantee of success -- according to economists Mary Daly Bart Hobijn and
- Rob Valletta of the Federal Reserve Bank of San Francisco.
- In a discussion paper published this month the Fed economists conclude that 99-week benefits have pushed up the U.S. jobless rate as much as 0.8 percentage points.
- The long-term unemployed now account for nearly half of all people out of work an unusually high share.
Protracted unemployment brings about a cascade of problems including poorer health and a slim likelihood of ever regaining prior earning power according to Columbia University economist Till von Wachter.
Source: Shortening Unemployment Benefits Will Help U.S. Jobless BusinessWeek August 2 2011.
