Unemployment Insurance Reform

This week, the U.S. Senate finally broke a filibuster by conservatives to approve an extension of unemployment insurance (UI) for 2.5 million people who lost their benefits when the program expired last month.  The House is expected to approve the bill today, which extends the program through November, offering the long-term unemployed up to 99 weeks of aid and making benefits retroactive to June 2 when the program expired.

The country is still reeling from the effects of the downturn.  Though the American Recovery and Reinvestment Act (ARRA) has undoubtedly benefited the economy, there are still 15 million Americans out of work.

While the Great Recession has been hard on families across the country, both states and the federal government have stepped up in unprecedented ways to ease the financial burden on the unemployed through extended benefits and modernization of state programs.  Compared to pre-recession rules that generally provided only 26 weeks of unemployment insurance, federal action extended support for up to 99 weeks in states hit hardest by the recession.

Last month, President Barack Obama signed the $17.5 billion Hiring Incentives to Restore Employment (HIRE) Act into law to assist small businesses and spur job creation.  This was definitely a start, but the gravity of the current crisis demands much bolder and quicker action.  Congress needs to enact further state fiscal relief to support jobs and avoid the massive layoffs that threaten social and economic vitality in the states.

In the State of the Union speech, President Barack Obama stated, "...jobs must be our number-one focus in 2010, and that's why I'm calling for a new jobs bill." With the fiscal crisis forcing states to layoff hundreds of thousands of teachers, nurses and police officers, the need for more federal job creation and state fiscal relief support is clear.  And there is substantial momentum building around this issue in the states.

In a time of rising costs, increased unemployment, and declining wages, American workers could easily feel like they’ve been left to fend for themselves. Fortunately, because of incentives and funding included in the American Recovery and Reinvestment Act, as a new National Employment Law Project report details, states across the country have enacted measures to make it easier for unemployed Americans to obtain unemployment insurance (UI) benefits (see also this past Dispatch for some key state models for reform).  Progress this session includes:

On Thursday, the official unemployment rate climbed to 8.1% nationwide as employers shed an additional 651,00 workers last month. Add in sharp rises in the number of involuntary part-time and long-time discouraged workers, and the unemployment rate rose to 14.8%. While long-term job growth is the goal of the recovery package, states need to, and some are already stepping up to, address the immediate needs of the unemployed. This Dispatch emphasizes key programs states can take advantage of to help their unemployed workers.

When Governor O'Malley (D-MD) announced his legislative agenda for the session, one centerpiece was an expansion of unemployment insurance to part-time workers currently excluded.  Other states, including  California, Hawaii, Oregon, Colorado, Minnesota, Iowa,Utah, and Texas are passing that and other reforms to modernize antiquated systems that leave many unemployed without help.  In fact, due to state rules, only 17 percent of low-wage unemployed workers and 37 percent of higher-wage unemployed workers are receiving benefits.

As the federal government considers an economic recovery plan that will most directly address the needs of those suffering and revive the economy, expanding funding for and modernizing state-based unemployment compensation systems should be a central part of any recovery plan. 

While the financial crisis has received more of the headlines, there has been a growing unemployment crisis over the last year.  With unemployment at a five-year high, nearly 10 million Americans were officially unemployed last month, with nearly 500,000 workers applying for benefits each week.  And the problem doesn't stop there, with long-term joblessness rising: