Senators Signal an Extension of Unemployment Benefits May Be Possible

Source: Bytemarks / Flickr

Source: Bytemarks via Flickr

President Barack Obama’s State of the Union address underlined his commitment to expanding the opportunities of the middle class and putting America’s jobless back to work. With his call for Congress to “restore the unemployment insurance you just let expire for 1.6 million people,” the president put the spotlight back on the country’s long-term unemployed. Now, a bipartisan group of Senators has announced that a compromise has been reached to extend jobless benefits to those Americans who have been unemployed for five months or more. If the deal is approved by upper house of Congress, the months-long dispute between Republican and Democrat lawmakers over how to cover the cost of the benefits extension and how long they should continue will be solved.

“Seeking to boost the economy and provide relief for the more than 2 million job seeking Americans who have lost emergency unemployment insurance coverage since December 28, 2013, a group of 10 U.S. Senators led by Jack Reed (D-RI) and Dean Heller (R-NV) today announced an agreement to reauthorize emergency unemployment insurance (UI) benefits for 5 months,” explained the press release issued by Senator Reed on Thursday. The bill is cosponsored by Republican Senators Susan Collins of Maine, Rob Portman of Ohio, Lisa Murkowski of Arkansas, and Mark Kirk of Illinois, as well as Democrat Senators Jeff Merkley of Oregon, Cory Booker of New  Jersey, Sherrod Brown of Ohio, and Dick Durbin of Illinois.  The plan will allow for retroactive payments to eligible beneficiaries going back to December 28.

On December 28, the Bush-era extension of emergency unemployment benefits expired, meaning the approximately 1.3 million Americans who had been collecting unemployment for more than 26 weeks lost benefits. Then-President George W. Bush signed the last extension of the program into law in late 2008 as the number of layoffs soared, pushing the number of people filing for unemployment insurance to a 16-year high. The deal also ended jobless payments to people earning over $1 million.

“There are a lot of good people looking for work and I am pleased we’re finally able to reach a strong, bipartisan consensus to get them some help,” Reed said. “Restoring this much needed economic lifeline will help job seekers, boost our economy, and provide a little certainty to families, businesses, and the markets that Congress is capable of coming together to do the right thing. It has now been 75 days since UI expired and it needs to be renewed. We’re not at the finish line yet, but this is a bipartisan breakthrough.”

Nearly eight million jobs were lost during the December 2007 through June 2009 recession — the greatest economic downturn in U.S. history since the Great Depression. In recent months, economic reports indicated the economic recovery has picked up; gross domestic product expanded at a 2.4 percent rate in the fourth-quarter following the third-quarter’s 4.1 percent increase, the manufacturing sector has rebounded, and the stock market reached recorded highs last year. While the housing market has recently hit headwinds, with rising prices hurting demand, throughout much of last year low-interest rates and pent up demand propelled home sales and boosted the construction industry, which in turned strengthen GDP. With the economic recovery taking small steps forward, job creation grow strong toward the end of 2013, which gave consumers more confidence to increase their outlays.

But, even with these economic gains, the tough problem is the lingering high numbers of long-term unemployed and the low labor market participation rate. As a January White House fact sheet on long-term unemployment stated, our economy even though businesses have added more than 8.2 million jobs over the past 46 months, the “remaining legacy of the recession is the crisis of long-term unemployment.” Worse is the fact that, for businesses, hiring a new employee who currently works in the field is a far less risky choice than a worker who has been out of a job for months or even years, especially as businesses are still hesitant about the economy. 

More From Wall St. Cheat Sheet:

Follow Meghan on Twitter @MFoley_WSCS