Worries grow over cuts to unemployment aid

People stand in a line that stretched around the block to enter a job fair on March 21, 2012 in New York City.

It used to be that you could get unemployment insurance for just six months. During the recession, Congress extended that, to a maximum of 99 weeks. That and subsequent extensions have cost the federal government an additional $384 billion.

“That is due both to the extended length of time that people could receive [benefits],” says James Ziliak, the Gatton Endowed Chair in Microeconomics at the University of Kentucky. “But it is mostly due to the fact there are just so many Americans who fell into unemployment.”

Last month, the Department of Labor said five million Americans have been jobless for more than six months.

If the U.S. economy goes over the “fiscal cliff” at the end of the year, millions of out-of-work Americans would lose their unemployment benefits. 

The current extension expires at the end of December, and if congress doesn’t renew it, more than two million of those Americans will be unable to collect unemployment insurance.

“Obviously, many of these people continue to try to find jobs, and I have no doubt that they will continue to try to find jobs -- even in the absence of any sort of unemployment insurance benefits,” says Matt Freedman, an assistant professor of economics at Cornell University.

But they may have to do that with a lot less help. 

So far, the focus of the “fiscal cliff” negotiations has been on tax increases and automatic spending cuts, not on extending unemployment. 

About the author

David Gura is a reporter for Marketplace, based in the Washington, D.C. bureau.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...