While most of us popped Champagne corks and rung in the New Year with carefree celebration, more than a million jobless Americans braced themselves for a year without much needed federal financial assistance. As part of a cost-saving compromise in the 2014 budget meant to appease fiscal conservatives, Congress allowed emergency unemployment compensation to expire in late December, removing a vital lifeline for some 1.3 million people nationwide.
In Texas, the cuts automatically affected more than 64,000 residents searching for employment and will end up hurting an additional 106,900 people mid-way through 2014, according to the Texas Workforce Commission. Jobless Texans can still obtain state unemployment insurance but those benefits only last 26 weeks (or about six and a half months), whereas before the expiration they could stay afloat for another few months through the federal program. In other words, when the state funds run out over time, Texans won’t be able to look to the feds for help.
“It’s unfortunate that 1.3 million Americans had to go through Christmas and New Year’s not knowing whether their benefits would be expanded and then finding out, in fact, they hadn’t,” Ed Sills of the Texas AFL-CIO tells the Current. “That’s a horrible way to spend the holidays— worrying about where your next rent payment or next meal is coming from.”
At the outset of the recession in 2008, the government extended the emergency unemployment program to help boost dismal unemployment rates—then hitting a record of 10 percent in 2009. As those figures have begun to steadily fall—today the unemployment rate is at 7 percent, according to the Bureau of Labor Statistics—the government has slowly pulled away aid, bringing the number of weeks someone can be covered by the program down from 99 to 46 last year. But while unemployment is faring better, long-term joblessness is still a glaring problem—the BLS notes that one out of three unemployed people have been out of work for 27 weeks or more.
What does it mean for San Antonio? In Bexar County, tattering the unemployment safety net likely overshadowed the excitement of a new year for around 3,384 jobless SAers, according to estimates from the Democrats of the Congressional Ways and Means Committee. BLS data shows 5.8 percent of San Antonio/New Braunfels residents are unemployed, as of October 2013, the most recent calculation available.
Sills says the unemployment crisis is actually much worse; the jobless rates on the books likely amount to a fraction of the total. “The number is just a really small piece of it because there are others who have gone unemployed much longer, but their benefits expired, so they’re no longer counted. There’s also a large number of people underemployed, doing part-time work that doesn’t cover all their expenses but does bring in some income.”
For instance, while approximately 16,900 people in Bexar County are currently registered for the federal unemployment assistance program, preliminary BLS figures show nearly 60,000 SAers overall remain unemployed.
Eva Esquivel of Workforce Solutions Alamo—a network representing 12 San Antonio-area counties—says the career service centers see an average of 127,000 customers annually. Esquivel says it’s too soon to tell how many more clients will walk through the doors for job search help in the coming months, but she and others statewide are working overtime to remind unemployed Texans they’re still here to support the process. “We strongly encourage unemployed individuals to learn about the demand jobs in our region so they can adequately prepare themselves to gain those jobs,” she said.
Mark Lavergne of the Texas Workforce Commission offers similar words of encouragement: “We want everyone to know they still have options, that the workforce system and local workforce solutions partners, is [sic] here for them. We are here basically to give them tools they need to find new employment opportunity.”
On a positive note, Lavergne says “The good news is we have a strong economy here in Texas that offers those opportunities,” and points to shrinking jobless rates in Texas—in December 2009 8.2 percent of residents went unemployed, as of November 2013 that number dwindled to 6.1 percent. U.S. Congressman Joaquin Castro of San Antonio hopes to come to the rescue when Congress reconvenes this week. He argues the cuts won’t just hurt jobless Americans but will have a hand in crippling the economy.
“It’s not only the benefits, which by the way, only average about $300 [$338 in Texas] a month … but also all that economic development for the country, for retailers, for grocers, etc. so it’s going to have a sizable impact on our economy if Congress doesn’t come back and do something about it,” Castro said on a recent episode of Meet the Press when asked about the economic ramifications of the cuts.
How can it screw up the economy? Stopping unemployment insurance can actually hurt job figures, and doesn’t do anything for job growth. The nonpartisan Congressional Budget Office estimates that extending the benefits for another year would create as many as 300,000 jobs nationwide and in Texas alone, failing to extend the program will cost 11,766 jobs. Part of the reason behind this is that the expiration of benefits could cause the long-term unemployed to refrain from work searches and to altogether leave the labor force, a December report by the White House Council of Economic Advisers and the Department of Labor concluded.
As for the overall economy—for every dollar of unemployment compensation spent, $1.52 in additional economic activity goes toward goods and services.
Gene Sperling, director of the National Economic Council, said the end to extended unemployment benefits, “defies economic sense, precedent and our values” and is especially egregious amid the holiday season, “Never before have we abruptly cut off emergency unemployment insurance when we faced this level of long-term unemployment and it would be a blow to these families and our economy,” he said in a statement. Indeed, since 1948 Congress has never allowed extended unemployment benefits to expire when unemployment rates were this high. Right now, the long-term rate (2.6 percent) is at least twice as high as it was during the expiration of every previous extended UI benefits program, according to the U.S. labor report.
A Senate vote to extend the program by three months was scheduled for Monday afternoon, but a proposal by Sen. John Cornyn (R-Texas) delayed the vote until Tuesday morning (after our press deadline). Senate Dems needed 60 votes to sail it through; it was unclear whether or not they could wrangle in enough GOPers to advance the bill. Even if it gets a Senate green light, the bill will still have to go through the House—where a Republican majority holds. (Check back in with sacurrent.com for the latest.)
President Obama, a vocal opponent of the cut, is slated to host an event on Tuesday with Americans who have lost their benefits. During a weekly radio address, Obama described the decision to deny families extended benefits as, “just plain cruel.”
Sills remains hopeful the situation can be rectified, “A lot of this is Congressional politics,” he said. “We believe and hope there is still a possibility of retroactively reestablishing benefits; there’s certainly a major effort in Congress to do that. We’re not giving up on this by any means.”
Coupled with the recent reduction to the Supplemental Nutrition Assistance Program (SNAP), commonly referred to as ‘food stamps’, the termination of UI benefits is a one-two punch to struggling Americans not quite in the post-Recession era clear. The continuing evisceration of the social safety net is backed largely by Republicans who claim federal welfare programs create lazy, freeloading populations and government-subsidized exploitation.
In Texas, that’s certainly not the case—the rates of improper unemployment payments are decreasing and are on the lower end in the country (even granting the Lone Star state commendation from the federal department for reducing their instances of abuse), according to mapped data via the Department of Labor. Like SNAP benefits, both programs require strict eligibility—recipients must be actively looking for work; for UI benefits, they must meticulously record and report weekly work search activities. If they refuse TWC or Workforce Solutions referrals for a suitable job, to apply for a suitable job or to accept a suitable job, they’ll be booted out of the program.
The program also serves as a buffer against poverty—according to U.S. Census Bureau estimates, unemployment benefits lifted 2.5 million people out of poverty in 2012 and has kept 11 million from poverty since 2008. Statistics like that make it hard to rationalize cutting the program. “It’s almost never about someone just giving up,” said Sills of long-term unemployment. “If there’s one thing I found in common with every unemployed person, it’s that they have a burning desire to work as soon as possible.”
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