Democrats move to extend unemployment benefits

In gearing up for the congressional elections, Democrats have launched a major attempt to turn national attention away from war to the economy. They hope that focusing on domestic issues will bring them victory in November.

One issue they are raising is an extension of unemployment insurance (UI).

By the end of this month, 1.5 million Americans will have exhausted their federal UI benefits. By the end of the year, that number will grow to 2.2 million, estimates the Center on Budget and Policy Priorities (CBPP) in Washington.

Introducing legislation Sept. 12 to extend unemployment benefits by a minimum of 13 weeks – 20 weeks in high unemployment states – Sen. Edward Kennedy (D) of Massachusetts employed what has become a standard political technique in Washington: the introduction of ordinary citizens affected by the proposed bill. It's the human touch.

One was Alan Gonsenhauser of Northborough, Mass., who lost his consulting job in December when his firm's largest client, Enron, got into trouble.

His UI benefits, supporting a wife and two children, expired Sept. 14.

In another pull on the heartstrings, Senator Kennedy called on Felix Batista, who lost his job and 73 of his co-workers at Windows on the World in New York's World Trade Center.

Last Wednesday, in a speech on the Senate floor, Sen. Tom Daschle (D) of South Dakota spoke of extending UI benefits and other "economic security" issues. Look at the record of the past 18 months of the Bush administration, the Senate majority leader said. "Record job losses. Weak economic growth. Declining business investment. Falling stock market. Shrinking retirement accounts. Eroding consumer confidence. Rising healthcare costs. Escalating foreclosures. Vanishing [budget] surpluses. Higher interest costs. Raiding the Social Security trust. Record executive pay. Stagnating minimum wage."

Phew! A long list.

Most economists would not blame any president for all of these problems. Most have to do with the economy moving from boom to recession, and the biggest factor in the business cycle is the monetary policy of the Federal Reserve.

A president, though, could address some of these problems. One is the minimum wage, which has not been raised since 1997. Another is UI. So far, the Bush administration has been silent.

"They are avoiding the subject," says Wendell Primus, an economist at CBPP.

Kennedy plans to attach either a boost in the minimum wage or a UI extension to other legislation in the Senate. He hasn't decided which, figuring legislation with both would be unlikely to get past the Republican-controlled House, spokesman Jim Manley says.

"The administration can no longer afford to ignore the pain and needs of ... struggling families," Kennedy says, putting forth a theme likely to be heard often in the election campaign ahead.

The extension of UI benefits in his bill would cost Washington about $1 billion per month.

Senator Daschle noted that the number of long-term unemployed – those jobless for six months or more – has grown from 648,000 in January 2001 to nearly 1.5 million in August.

For the unemployed, UI benefits are "an important but weak safety net," Lawrence Mishell, president of the Economic Policy Institute in Washington testified in Senate hearings Sept. 12. Without them, he says, "many families would quickly descend into poverty." Nearly one-third of jobless workers are unable to replace even 10 percent of their lost income from savings.

Mr. Mishell notes that only 48 percent of today's workers who become jobless get UI benefits, far fewer than in the past. They get on average $254 a week for 14.7 weeks.

Last March, Congress passed an extension of unemployment benefits as part of the economic stimulus package. The program expires Dec. 31. But, according to Mr. Primus and his colleague Jessica Goldberg, though unemployment at 5.7 percent of the labor force in August would indicate a mild recession, this economic slump has hit workers harder than the 1990-91 recession.

Some 2.3 million workers exhausted their regular UI benefits over the past six months, more than the 2 million for the same period in the last recession.

Further, the current UI program is considerably less generous than the program established in 1991.

To Ron Bird, an economist with the more conservative Employment Policy Foundation in Washington, the "real issue" is the effectiveness of the nation's job service and unemployment insurance system in finding work for the jobless.

The percentage of the unemployed exhausting their benefits is going up. But this is not because there aren't jobs "out there,'' Mr. Bird says. State-operated job placement agencies, he says, must do better in training unemployed workers for those jobs and then matching them to the positions.

Bird calls an extension of UI benefits a "Band-Aid solution."

But Primus sees a second vital role for extending benefits. Besides helping the jobless, it would give the economy needed support. Benefits are targeted to areas hardest hit by the downturn. That money is quickly spent, he says.