In Focus

Apr 1, 2014  |  PERMALINK »

Senate Prepares to Renew Jobless Benefits

By Neil Ridley

Update: The Senate passed a temporary extension of federal unemployment benefits on Monday, April 7.

This week, the Senate is expected to pass a five-month extension of federal unemployment benefits, which lapsed at the end of 2013 when Congress failed to renew the program. Since December 2013, more than 2 million jobless workers have been cut off from benefits—deprived of a critical lifeline while they search for work in what is still a tough job market.

Even though the national unemployment rate has dropped below 7 percent, long-term unemployment remains persistently high—a disturbing aftereffect of the Great Recession.  In February 2014, 37 percent of jobless workers—3.8 million people—had been out of work for 6 months or more. Studies show that the longer workers are unemployed, the more difficult it is for them to find work. One recent study finds that long-term unemployment remains at historically high levels and employment transitions remain challenging, even in states with low unemployment rates. 

Unemployment benefits are not only one of the first lines of defense in a weak economy, but also a proven anti-poverty strategy. Census data show that unemployment benefits kept 1.7 million people above the poverty line in 2012, even as workers faced a reduction in the number of weeks of federal benefits.

The Senate bill includes two notable policy changes. First, it eliminates unemployment insurance benefit payments for individuals whose adjusted gross income in the preceding year reached $1 million or more. Second, it authorizes intensive assessments and reemployment services for long-term jobless workers.

When the Senate approves the extension later this week, the scene of action will turn to the House of Representatives.  It will be up to House members to restore and maintain current unemployment benefits for workers who need additional assistance while they look for jobs in a slowly recovering economy. 

Mar 7, 2014  |  PERMALINK »

Subsidized Employment a Key Strategy in President’s Budget

By Elizabeth Lower-Basch

President Obama’s FY 2015 budget proposal includes several provisions to expand the availability of subsidized employment for unemployed and disadvantaged workers.  This is critical, because unemployment remains high, with 3.8 million workers unemployed for 27 weeks or more.  Youth face particularly high unemployment rates, 21.4 percent in February 2014.  Subsidized employment was shown to be an effective and well-received strategy when funding was available under the TANF Emergency Fund.

The proposals in the President’s budget include:

  • A proposed $2.5 billion for Summer Jobs Plus, of which $1.5 billion would be distributed by formula funding to local communities to support summer and year-round jobs for an estimated 600,000 youth.  The remaining $1 billion would support innovation grants aimed at improving skills and career options for disadvantaged youth.
  • A recommendation to shift $602 million from the TANF Contingency Fund to a new Pathways to Jobs program, which would support state-subsidized employment programs for low-income individuals.  Participants could either be eligible for TANF cash benefits or have incomes below 200 percent of the federal poverty level and facing other barriers to employment. The program could cover 100 percent of wages, benefits and training costs for up to the first 90 days of employment.  Because the Contingency Fund is included in the budget baseline, this proposal would not require new funding.
  • Allowing funding under the Health Professions Opportunity Grants, which supports job training and supportive services for TANF recipients and other low-income individuals, to be used for subsidized employment to help workers transition from training to unsubsidized jobs in the health field.
  • Supporting training and work opportunities for youth and veterans to improve and maintain parks as part of the National Park Service’s Centennial.
  • Extending and revising the Work Opportunity Tax Credit (WOTC), which provides tax incentives to businesses that hire members of certain targeted groups, including welfare and SNAP recipients, veterans, and individuals with disabilities.  The reforms would focus the credit on businesses that expanded their hiring from these groups compared to previous years.

This budget builds on steps the Administration has already taken, such as prioritizing funding for subsidized employment and other work-based learning for long-term unemployed workers under the competitive Ready to Work grants supported by revenues under the H-1B visa program.

CLASP believes that subsidized employment is a valuable way to enable disadvantaged adult and youth workers to develop real work skills and experience while earning money to support themselves and their families.  

Jan 24, 2014  |  PERMALINK »

2014: The Year for Action on State Work Sharing Programs

By Neil Ridley and Lavanya Mohan 

As 2014 begins, states have a unique opportunity to enact work sharing programs that have the potential to save thousands of jobs. Work sharing, also known as short-time compensation, is a modified form of unemployment insurance (UI) that gives employers the option of reducing employees’ hours instead of cutting their workforce during a business slowdown. For example, a business may reduce all employees’ hours by 20 percent instead of cutting some of its workforce. Workers can then receive pro-rated unemployment benefits that help compensate for reduced work hours. 

The recent recession, which triggered huge job losses, spurred interest in work sharing programs as an alternative to layoffs. According to the U.S. Department of Labor, as a result of work sharing, states were able to save nearly 166,000 jobs in 2009—the worst year of the recession. If a program had been in place in 2009 in the remaining 24 states without a work sharing program, up to 70,000 additional workers would have stayed on the job and more employers would have weathered the downturn while retaining qualified workers.[1] 

This is a crucial year for action on work sharing because states face an application deadline for federal funding. The 2012 Middle Class Tax Relief and Job Creation Act, which sets aside $100 million in federal grants for work sharing program improvement and outreach to employers, requires states to apply for a grant by December 31, 2014

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[1] CLASP calculations based on data derived from Katharine G. Abraham and Susan N. Houseman, Short-Time Compensation as a Tool to Mitigate Job Loss? Evidence on the U.S. Experience during the Recent Recession, W.E. Upjohn Institute for Employment Research, 2013 and Sean O’Leary and Paul Miller, Reducing Layoffs: How Work Sharing Can Help Workers and Businesses in West Virginia, West Virginia Center on Budget & Policy, July 2012.


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