Main Street

Unemployment Q&A Continued

Thanks to George Wentworth of the National Employment Law Project for answering reader questions about unemployment insurance.

(1) Question from Main Street blogger Mitchell Hirsch:

Thank you so much for taking time to answer reader questions and providing such clarity to what can be a confusing mass of information on unemployment insurance.

It has been reported that the Senate may take up a bill including a likely 3-month UI/COBRA extension late this week or next. If they do, and it passes, the House would still need to act on it or go to a conference with the Senate on the two bills - a time-consuming process with time running out.

Wouldn’t the House need to act to pass an extension again, then, by Feb 19 - and wouldn’t that require them to stay in session for at least part of next week despite the Presidents Day Recess? With millions of
unemployed workers and their families facing the end of their benefits, shouldn’t Congress stay in session until they get a UI/COBRA extension done?

Thanks for taking the time, and for your expertise as well.

Answer: Thank you for your question which brings us up to date on events of the last 24 hours. It is our understanding that the new Senate jobs bill will include provisions reauthorizing the EUC program, federal funding of EB, the $25 supplement (FAC) and the 65% COBRA subsidy through May 31, 2010. This is one month less than the House jobs bill which extended these same provisions through June 30, 2010.

You are correct that these provisions will have to be reconciled but it is still too early to tell exactly how this will play out procedurally. (It is possible that the Senate could pass a stand-alone extension sooner than the entire jobs bill.) However, on your larger point, I absolutely agree that it is imperative that Congress act to reauthorize these unemployment insurance (UI) extensions and COBRA subsidies before leaving town. As NELP and state UI program administrators have been saying for weeks, if reauthorization is not passed by February 19th, states are legally bound to start phasing out the existing programs. This will create unnecessary hardship and confusion for unemployed workers and their families. This is why unemployed workers should immediately let their elected representatives know that it is critical to enact the unemployment insurance and COBRA provisions of the jobs bill before the February recess.

(2) Question from Working America regional director Dan Heck.
We often hear from members who are unemployed, but even the members who still have jobs are afraid of losing them. What effect, if any, does extending unemployment benefits have on members who still have jobs, and the economy overall?

Answer: We all know that an important goal of unemployment insurance (UI) programs is to partially replace the pre-layoff wages of unemployed workers. While a good program aims to replace about 50% of wages, the reality is that - on average - UI benefits only replace about 36% of workers’ prior wages.

What is less widely known, however, is the impact of UI on local economies. Unemployment insurance has been called the most direct economic stimulus that government can provide. UI benefits help unemployed workers pay for essentials like mortgages, rent, food, childrens’ clothes, etc. Leading economists have concluded that every dollar in UI benefits produces $1.63 in local economic activity. . When a community has a major plant closing or layoff, UI benefits help middle class workers with limited savings from losing their homes and falling into poverty.

For a worker who is still employed, the value of a strong UI safety net may not be readily apparent until the worker - or someone the worker knows - is actually unemployed. But UI is critical to keeping communities economically strong during periods of rising unemployment, which helps local businesses and the people that they employ.. For employers, the fact that a worker receives UI benefits during a temporary downturn provides some assurance that the worker will be available for recall when things pick up again. For the worker who is still employed and worried that her boss may think she is expendable, UI provides a protection in the form of insurance - an employer knows that a decision to lay off a worker means bearing the cost of that decision in higher UI tax costs.

Unemployment Insurance - part of the Social Security Act of 1935 - represents a fundamental compact for every American worker and employer. Workers who have provided their labor for an employer over time will be insured by that employer against the consequences of involuntary unemployment. And that is good for all of us.

(3) Question from Jane0218:

Is there the possibility of Congress adding more weeks to the existing EUC program tiers, instead of adding a Tier V?

There are so many people who have nothing coming in, especially older individuals who find themselves not as marketable as younger individuals. They are suffering the most, IMHO.

Answer: Sorry, at this point, there does not appear to be any discussion of Congress reconfiguring the 4 existing tiers of EUC, which are as follows:

Tier I- 20 weeks
Tier II - 14 weeks
Tier III - 13 weeks
Tier IV - 6 weeks.

No legal advice is being given and no attorney-client relationship is created by the use of this information. An attorney should be consulted for more detailed information in individual cases. The National Employment Law Project (NELP) and Working America (WA) shall not be liable for the information provided herein, or for the results obtained from the use of such information.

Tags: unemployment