Screwed Unemployed Workers and Rising Concentrated Poverty

February 24, 2012 | The Nation |  Link to article

Congresswoman Barbara Lee, co-chair of the Congressional Out of Poverty Caucus, voted against the recent extension of unemployment benefits because it shortened the maximum number of weeks a jobless worker could qualify.

"Instead of scaling back unemployment benefits we need to be adding weeks to help people get by when there continues to be four workers in line for each job," said Lee.

She makes a hell of a point.

While most of the media have focused on the Democrats "pretty much getting what they wanted," it has given short shrift to what this deal means for the long-term unemployed, currently at near-record levels, with 43 percent of unemployed people jobless for more than six months. Under the new deal they will receive fewer weeks of unemployment benefits than were available between the end of 2009 and last year, with the maximum reduced from ninety-nine weeks to seventy-three weeks by September 2012. 

So what are the consequences of the Democrats' "win" for the long-term unemployed? 

A new report from the US Government Accountability Office (GAO)-"Unemployment Insurance: Economic Circumstances of Individuals Who Exhausted Benefits"-gives some indication of what might lie ahead for these folks and others not even fortunate enough to qualify for unemployment benefits in the first place.

The GAO notes that of the 15.4 million workers who lost jobs from 2007 to 2009, half received Unemployment Insurance (UI), half didn't and about 2 million exhausted benefits by early 2010.

That group of 2 million had an unemployment rate of 46 percent in January 2010, and a poverty rate of 18 percent compared to 13 percent among working-age adults. More than 40 percent of those who had exhausted their benefits had incomes below 200 percent of the federal poverty line (below about $35,000 for a family of three), which is the level where many economists believe people start really struggling to pay for the basics. 

The good news is Mitt Romney's strong safety net then kicks in, right? So we can anticipate that unemployed people are able to obtain a little cash welfare until that four-to-one (job seekers-for-every available job) ratio drops down? 

Not so much. 

Temporary Assistance to Needy Families (TANF), a cash welfare program designed to help families in distress, is a case in point. It doesn't reach as many people as it used to-only twenty-seven for every 100 families in poverty, compared to sixty eight of every 100 prior to the 1996 welfare reform that both parties tout as a success. It's also limited to people with children age 18 or younger, so over half of those who exhausted UI benefits didn't qualify. Therefore it comes as little surprise that only 3 percent of households that exhausted UI benefits received TANF; 15 percent received food stamps, and18 percent were in families where someone received retirement, disability, or survivors benefits from Social Security programs.

What is also striking is who doesn't qualify for unemployment benefits at all.

According to the report, 49 percent of the 15.4 million people who lost jobs between 2007 and 2009 received UI, and that's only because the program expanded during the recession. From 2005 to 2007, only 36 percent of the 8.3 million people who lost jobs received benefits. Who's being excluded? 

Low-wage workers, primarily.

"Those in the bottom 30 percent in earnings were half as likely to receive UI benefits as displaced workers in the top 70 percent," the report reads.

The GAO notes that it's tougher for these workers to meet the minimum earnings requirement and "family crises can also cause some in marginal financial situations to quit a job (for example, to care for a sick child)" which can make them ineligible in some states due to quitting "voluntarily."

"Nearly half of displaced workers didn't receive unemployment benefits," says Elizabeth Lower-Basch, senior policy analyst at the Center for Law and Social Policy. "Moreover, all the young adults transitioning into the labor market who haven't been able to get their first jobs because of the recession aren't counted as either displaced workers or UI recipients. So both the displaced workers who didn't receive UI and the youth entering the workforce are likely to have even higher poverty rates than those who have exhausted their UI benefits."

In 2010, the federal extension of unemployment benefits kept 3.2 million Americans from falling into poverty. In 2012, with this recent Congressional deal reducing the maximum number of weeks of benefits, will we see the same antipoverty effect? And what about the workers who receive no benefits at all? 

Maybe it's time to look at how the unemployment insurance system functions as a whole, and how it can reach more people.

site by Trilogy Interactive