“Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence were all my business.” – Marley’s ghost in Charles Dickens’ “A Christmas Carol”
Because of the failure of Congress to act, the Maine Department of Labor estimates that three days after Christmas more than 3,500 unemployed Mainers will receive a most unwelcome present: loss of indispensable unemployment benefits that keep them and their families from financial calamity.
Maine’s unemployment rate has slowly improved since the depths of the Great Recession of 2007-2009. Still, it remains nearly two percentage points higher than before the recession. Especially troubling, more than one-third of Maine’s nearly 50,000 currently unemployed have been without work for six months or more.
Recently the U.S. House of Representatives adjourned for the holidays without extending emergency unemployment compensation for the long-term unemployed due to expire on Dec. 28. As a result, according to a recent report by the President’s Council of Economic Advisors, unless Congress acts in the new year, as many as 18,100 unemployed Mainers could lose this critical support over the coming year.
Since January 2008, when Congress established EUC to provide federally funded extensions to state-based unemployment insurance programs, more than 80,000 Mainers have benefited at least temporarily from EUC. But the state’s entire economy also benefits. The loss of these federal funds will ripple through Maine’s economy, as the long-term unemployed can no longer afford to purchase basic necessities such as housing, food, and fuel. CEA estimates that as many as 675 additional Mainers will lose their jobs as a result. And without the support EUC provides, those who lose their benefits will increasingly need to rely on other state and federally funded assistance programs like Medicaid, food stamps, and Temporary Assistance for Needy Families.
In a recent blog post, MECEP economist Joel Johnson noted:
“Unemployment benefits have helped pull millions of unemployed workers and their families across the nation out of poverty and have strengthened the economic recovery by putting money in the pockets of people who spend it on necessities. The (nonpartisan) Congressional Budget Office has consistently ranked unemployment benefits as one of the most effective things Congress can do to increase economic growth and hasten the economic recovery.”
Unemployment insurance critics argue that it discourages people from work, but the data belie this argument. An October 2013 column in The New York Times, quotes Harvard University Bloomberg Professor of Economics Raj Chetty:
“Nearly a dozen economic studies have analyzed this question by comparing unemployment rates in states that have extended unemployment benefits with those in states that do not. … These studies have uniformly found that a 10-week extension in unemployment benefits raises the average amount of time people spend out of work by at most one week. This simple, unassailable finding implies that policy makers can extend unemployment benefits to provide assistance to those out of work without substantially increasing unemployment rates.”
As MECEP’s recent report, The State of Working Maine in 2013, found, nearly five years since the Great Recession ended, “workers in Maine and across the nation remain in crisis.” Looking beyond the monthly employment report, MECEP cites U.S. Department of Labor data showing that on average over the past 12 months, 49,400 Mainers were unemployed and actively searching for work. Another 52,000 Mainers couldn’t find full time work or have stopped looking altogether. Maine has recovered just 9,900 of the 29,100 payroll jobs lost as a result of the recession.
We need state and federal policies that will strengthen our economy, get workers back on the payroll, and protect the unemployed, including those who have been seeking a job for a long time. The failure of Congress to extend EUC benefits is a step in the wrong direction. It will hurt not only the people directly affected but also our overall economy. Congress needs to make a New Year’s resolution to act swiftly to restore EUC to provide a lifeline to the long-term unemployed in Maine and across America.
Mark Sullivan is communications director at the Maine Center for Economic Policy.