Unemployment benefits need overhaul

Robert Reich

TEXT OF COMMENTARY

KAI RYSSDAL: The Senate's still trying to figure out what it thinks about the economic stimulus package. Treasury Secretary Henry Paulson told the Budget Committee today, he'd just as soon they vote on the cheaper House version and be done with it. Specifically he said the White House doesn't see any need to extend unemployment benefits.

Commentator Robert Reich does, but he says the whole system needs to be fixed.


ROBERT REICH: The Senate is considering whether to lengthen the period of time people can collect unemployment benefits if they still can't find a job after six months, which is how long unemployment insurance is now available. That's sensible.

A new study by the Economic Policy Institute estimates almost two million job losers will run out of unemployment benefits this year unless benefits are extended. It's not unusual to extend benefits during a recession, because recessions often last longer than six months, and businesses don't start hiring again until the economy picks up, and there are few better ways to stimulate the economy. Unemployment benefits put cash directly in the hands of people who need it most, and are most likely to spend it.

But running out of benefits isn't the biggest problem facing job losers. It's not getting benefits to begin with. The troubling fact is most people who lose their jobs simply don't qualify.

That's because the unemployment insurance system was designed more than a half century ago. Back then, most people who lost their jobs had been employed full-time for years, and most households had one wage earner. Even though those realities have changed, the rules haven't. In most states, you're eligible for unemployment insurance only if you've lost a full-time job that you've had for quite a while.

This leaves out just about everyone who's lost one or more part-time jobs, and also excludes any full-time worker who had been at the job less than a year before they got canned. It also excludes people who had to leave their job to accompany a working spouse to another city or state. Altogether, the current rules leave out more than half of the American workforce.

So it's not enough merely to extend unemployment benefits. If Congress really wants to help the millions of Americans who will lose their jobs in the coming recession, and also stimulate the economy, it should make sure job-losers get benefits in the first place.

KAI RYSSDAL: Robert Reich is Professor of Public Policy at the University of California at Berkeley. Back in the day, he was Secretary of Labor for President Clinton.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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