Five Million Americans to Lose Benefits at Year’s End

If Congress fails to reauthorize the EUC program, two million workers now collecting federal unemployment benefits will be cut off after payment for the week ending December 29th, and nearly one million more workers will run out of state unemployment benefits without access to EUC by the end of the first quarter of 2013.

Based on other data, NELP puts the figure close to five million. The Wall Street Journal’s estimate is two million. The figures are large enough to be measured both in terms of human tragedy and another drag on the economy as it reaches year’s end, along with that of the fiscal cliff. The debate over the problem has become whether it is wise for the federal government to support these people with unemployment benefits or risk tax revenue and damaged GDP growth if they have no income at all.

The other fight over unemployment benefits, particularly in a period in which austerity is a primary concern among politicians, is the very old theory that people who get aid because they are jobless have no incentive to find work. The champions of that way of thinking will not be swayed by wider economic arguments.

The calculus of eliminating unemployment gets a new set of figures this year. The fiscal cliff may drop gross domestic product by 0.5% in the first quarter of next year, if no solution is found, according to the Congressional Budget Office. That does not include what also will happen if millions of people become financially destitute or become part of the burden carried by local governments, families or nonprofit aid organizations.

Some members of Congress will argue that, with almost 40% of all people unemployed long-term, many of these people are beyond the point when they can ever get jobs. Their skills may have eroded, or they may live in communities in which joblessness remains above 10%. The federal government cannot support millions of these people forever, so it is only a matter of deciding when to cut them off.

The issue of support for the long-term unemployed could go far after their benefits lapse. Whatever the effects, they cannot help but be part of the fiscal cliff, even if they are not officially identified as such.

Douglas A. McIntyre