Lack of unemployment funding could hurt local businesses

NEW YORK - OCTOBER 08: Dale Chandler's unemployment insurance notice sits on a table on October 8, 2010 in the Brooklyn borough of New York City. The U.S. government reported today that the U.S. economy continued to shed jobs for the month of September. The unemployment rate remained unchanged at 9.6 percent in August


JEREMY HOBSON: Tackling the deficit seems to be a more pressing priority for Congress than helping the jobless. Today funding runs out for extended unemployment benefits. That's $310 a week on average for up to 99 weeks paid by the federal government to the unemployed. Democrats have been trying to pass a $12 billion extension since before Thanksgiving. But yesterday Republicans again successfully blocked it citing the money it will add to the deficit. So if two million long-term unemployed Americans lose their assistance, which businesses feel it?

Marketplace's Mitchell Hartman went to find out.

Mitchell Hartman: The average unemployment check's $300 a week -- the bottom of the income ladder where families typically spend well over half of what they make on necessities.

So when unemployment checks stop, it's felt right away by businesses like gas stations, apartment operators, and grocery stores.

Grant McLoughlin: A good portion of our business currently is subsidized by public assistance.

Grant McLoughlin is with Fresh Grocer, with 10 stores in Philadelphia.

McLoughlin: People that don't have the unemployment insurance may not shop there at all, or be shopping elsewhere or I don't know what they're going to do, but it could certainly impact our bottom line which would probably force us to cut back on our labor force.

I asked Kathy Getsla of Blaine, Wash., what she'll do. She's 60, has been out of work for 18 months and says she's already cut her food, gas, and utility bills to the bone.

Kathy Getsla: I just hope to squeak by. But it'll be on savings I had not anticipated to be dipping into.

If funding isn't restored, it could slow the economy next year.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.


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