Wednesday, April 9, 2008

Job Losses Bolster Calls for Extension of Benefits

Job Losses Bolster Calls for Extension of Benefits

By Erik Eckholm

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Job losses in the national economy combined with a surge in new claims for unemployment insurance are giving a boost to proposals - pushed for months by Democratic leaders and labor groups - to extend unemployment benefits beyond their usual limit of 26 weeks.

Bolstering the case for an extension, its advocates say, are indications that laid-off workers are having an especially tough time finding new jobs, even compared with past recessions.

Over the last year, more unemployed workers have exhausted their benefits before finding new jobs than in the years preceding the recessions of 1990 and 2001, according to a new analysis by a private research group, the National Employment Law Project, which will present its findings to Congress on Thursday.

There were 407,000 new applicants in the week that ended March 29, an increase of 38,000 over the previous week, according to federal data. Nearly three million workers were collecting state unemployment insurance as of March 22. But from March 2007 to March 2008, 2.7 million workers saw their benefits, averaging $290 a month, run out, putting intense financial pressure on families and worsening other problems like mortgage defaults.

Extending benefits can reduce personal hardships and also, economists say, provide a quick and sure boost to the economy since recipients nearly always spend the money to meet immediate needs. In 2002 - after the recession had ended, it was later determined - Congress passed an extension of 13 weeks, and more in states with particularly high and rising unemployment. In 1990, what started as an addition of 13 weeks was later expanded to 26 weeks, with some states authorized to pay benefits for an extra 33 weeks.

Most of those laid off over the last 12 months eventually found work, but about 821,000 workers exhausted state unemployment insurance benefits and remain unemployed today, according to a new calculation by the Employment Law Project, based in Oakland, Calif., using a method developed by the Labor Department.

The call for extending benefits, which is normally done during recessions, has taken on sharp political tones at a time when the White House has avoided declaring an economic downturn.

Democrats in Congress had wanted to include an extension in the stimulus plan passed in February, but the White House opposed it. The main proposals would allow payments for an additional 13 weeks in most states, and 26 weeks in states with especially high unemployment, by drawing down the federal unemployment trust fund, which holds more than $35 billion.

On Monday, President Bush again rejected the idea, urging Congress to "give the pro-growth package that was passed overwhelmingly a chance to work."

Both Democratic presidential candidates have renewed their calls for a benefits extension as part of a "second stimulus." Senator John McCain, the presumptive Republican nominee, has not supported the idea.

Congressional Democrats are stepping up their efforts and hope that more Republicans, especially from states with high unemployment, will join them.

In a report issued Tuesday, the House Ways and Means Committee said that "nearly 1.3 million workers have been unemployed for more than six months" and that "Congress should quickly extend unemployment benefits."

According to a report by the Congressional Budget Office, extended benefits would cost $1 billion to $2 billion per month, and would be a quick way to increase spending and aid the economy.

Advocates of a benefits extension note that long-term joblessness is a bigger problem now than it was at the start of past recessions. The average duration of unemployment for laid-off workers was 16.2 weeks in March 2008, compared with 12.6 weeks in March 2001 and 11.9 weeks in July 1990, according to federal data.

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