The jobs crisis has left so many people out of work for so long that most of America’s unemployed are no longer receiving unemployment benefits.
Early last year, 75 percent were receiving checks. The figure is now 48 percent — a shift that points to a growing crisis of long-term unemployment. Nearly one-third of America’s 14 million unemployed have had no job for a year or more.
Congress is expected to decide by year’s end whether to continue providing emergency unemployment benefits for up to 99 weeks in the hardest-hit states. If the emergency benefits expire, the proportion of the unemployed receiving aid would fall further.
The ranks of the poor would also rise. The Census Bureau says unemployment benefits kept 3.2 million people from slipping into poverty last year. It defines poverty as annual income below $22,314 for a family of four.
Yet for a growing share of the unemployed, a vote in Congress to extend the benefits to 99 weeks is irrelevant. They’ve had no job for more than 99 weeks. They’re no longer eligible for benefits.
Their options include food stamps or other social programs. Nearly 46 million people received food stamps in August, a record total. That figure could grow as more people lose unemployment benefits.
So could the government’s disability rolls. Applications for the disability insurance program have jumped about 50 percent since 2007.
“There’s going to be increased hardship,” said Wayne Vroman, an economist at the Urban Institute.
The number of unemployed has been roughly stable this year. Yet the number receiving benefits has plunged 30 percent.
Government unemployment benefits weren’t designed to sustain people for long stretches without work. They usually don’t have to. In the recoveries from the previous three recessions, the longest average duration of unemployment was 21 weeks, in July 1983.
By contrast, in the wake of the Great Recession, the figure reached 41 weeks in September. That’s the longest on records dating to 1948. The figure is now 39 weeks.
“It was a good safety net for a shorter recession,” said Carl Van Horn, an economist at Rutgers University. It assumes “the economy will experience short interruptions and then go back to normal.”
Weekly unemployment checks average about $300 nationwide. If the extended benefits aren’t renewed, growth could slow by up to a half-percentage point next year, economists say.
The Congressional Budget Office has estimated that each $1 spent on unemployment benefits generates up to $1.90 in economic growth. The CBO has found that the program is the most effective government policy for increasing growth among 11 options it’s analyzed.