Congress dealt with the budget and sequester, but failed to extend Emergency Unemployment Compensation, before it adjourned for Christmas.
The EUC program is typically implemented by Congress when the jobless rate is high, as it is has been since the Great Recession. It enables the federal government to cover unemployment benefits after people exhaust their state benefits, which generally run six months. EUC benefits can last up to 73 weeks, depending on the unemployment rate in a given state. At this point, without further Congressional action expected before the New Year, 1.3 million of the long-term unemployed will lose their benefit checks, which average about $270/week, as of December 28.
And economists are beginning to worry that high long-term unemployment may be with us for a while.
Nancy Shields is 59 and lives in San Diego. She managed a chain clothing store with about sixty employees. The chain downsized, and Shields was laid off. She’s seen a lot of turnover during her nearly four-decade career in retail.
“I was usually able to get another job within a couple of weeks,” says Shields, “because I have quite a bit of experience under my belt.”
But she’s had no luck this time. She’s been job-hunting for two years and is about to run out of emergency unemployment benefits. She says she’ll take a job at McDonald’s at that point, if she can land one. She says it might cover her rent — she rents a room from a family — but not all of her living expenses.
Long-term unemployment has not been this high, for this long, since the government started keeping track after World War II. Nearly four in ten of the unemployed (37.3 percent in November 2013) have been looking for six months or longer. Long-term unemployment peaked at nearly double the peak it has hit in previous post-war recessions. (The runner-up peak was hit in June 1983, at 26 percent, and it fell back quickly after that).
The situation of the long-term unemployed has Michael Strain, an economist at the conservative American Enterprise Institute, sounding like a bleeding heart. He favors extending federal unemployment benefits to keep people engaged. He says many of these people, through no fault of their own, have been deprived of work and the ability to find work by the worst financial crisis in a generation.
“A lot of the long-term unemployed probably are hanging on to the labor force by a pretty thin thread,” says Strain, “feeling like they may not succeed and they don’t have a lot of confidence in their ability to reenter employment.”
As they go longer and longer without work, Strain says they are less likely to be considered by potential employers, who can afford to be choosy in a high-unemployment labor market.
With approximately three job-seekers for every available job, the danger is that many of the long-term unemployed will eventually give up: raid retirement savings, double-up with family, or try to go on disability.
But that won’t work for everyone.
“It’s been kind of a frantic lead-in to the holidays,” says Susan Prouty of Spokane, Washington. “We’ve put up the lights and I’m trying to put on a happy face for the kids, but I am in a panic.”
Prouty was laid off back in the spring from her job as a DJ and producer at a local Top-40 radio station. She’s a single-parent with two teenagers at home, and her emergency unemployment benefits from the federal government are about to stop due to Congressional inaction. She says she applies for jobs every day.
“With thirty years in the same business,” says Prouty, “you’re either under-qualified or overqualified for almost everything. It’s really hard to get somebody from a coffee shop to take you seriously.” But she says that, if offered, she absolutely would take a job like that.
In the meantime, Prouty’s been working hard to get a self-employment business off the ground. She’s DJ’ing private parties, and developing a niche market: swing to disco, for senior citizens.