LITTLE ROCK — Aid for thousands of jobless Arkansans will be on the line when Congress considers in January whether to extend federal long-term unemployment benefits.
Earlier this month, Congress agreed on a two-year budget deal that avoided a government shutdown but did not include an extension of long-term unemployment benefits. As a result, the jobless benefits of 1.3 million Americans expired Saturday, and another 3.6 million people will see their benefits expire over the next six months unless lawmakers approve an extension after they return in January.
In Arkansas, the jobless benefits of nearly 9,000 people expired Saturday, according to the state Department of Workforce Services. Between 650 and 700 Arkansans exhaust regular state benefits and move to extended benefits each week, so over the next six months more than 18,000 additional people in the state could lose benefits without congressional action.
The federal Emergency Unemployment Compensation program was created in 2008 to help Americans who were unable to find work because of the recession. Before it expired, the program offered between 14 and 47 weeks of federal jobless aid, depending on a state’s unemployment level, to people who had exhausted their state unemployment benefits.
Arkansas’ unemployment rate — 7.5 percent in November, 0.5 percentage points higher than the national rate — qualified its residents for up to 37 weeks of federal long-term unemployment benefits after they exhausted state jobless benefits.
State unemployment benefits in Arkansas average $290 per week, with a 25-week cap, and are funded by a tax on employers. The federal government was funding emergency unemployment compensation, which averaged $300 per person per week nationwide.
Extending the program for another year is estimated to cost between $25 billion and $26 billion.
The state Department of Workforce Services is encouraging recipients of the benefits to continue filing claims.
“While the EUC program is going to end (Saturday), you should continue to file your weekly claims to preserve your rights to EUC benefits in the event that the EUC program is later reauthorized by Congress,” DWS spokeswoman Becky Heflin said Friday.
Democrats are pushing for an extension. President Obama, House Minority Leader Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., have all said they want passing an extension to be the first item on Congress’ agenda in 2014.
Some Senate Republicans favor at least a short extension. Sens. Jack Reed, D-R.I., and Dean Heller, R-Nev., have introduced a bill to extend the program for three months, and Reid has pledged to bring it up.
Some Republicans in Congress have questioned the need for an extension, noting have that national unemployment is declining and the economy is improving. Some say that without the long-term benefits, people who may have been holding out for an ideal job will take a lower-paying job, and as a result unemployment will decline further.
Alan Hughes, president of Arkansas AFL-CIO, said Congress should pass more than a three-month extension, saying the outlook for the unemployed is not going to turn around in three months. He said people are not choosing to live on unemployment.
“They’re not deadbeats. They’re people out there struggling, trying to make ends meet and trying to find a job,” he said.
The expiration of long-term unemployment benefits does not only hurt the unemployed, Hughes said.
“When people are living on unemployment, that money’s going right back into the economy,” he said. “They’re living from paycheck to paycheck, and some of them are still not making it on that. It affects not just them, it’s going to affect the ones that count on them spending that money.”
Randy Zook, president and CEO of the Arkansas State Chamber of Commerce and Associated Industries of Arkansas, said it is time for Congress to stop reauthorizing the five-year-old program.
“The economy is now recovering, even if at a rate that we wish would be faster or quicker, but there’s plenty of growth in the economy now,” he said. “We don’t think that it’s necessary to extend that anymore.”
The nonpartisan Congressional Budget Office has said that extending the benefits would have a positive effect on the economy.
“Extending emergency unemployment benefits would raise gross domestic product and employment in 2014 relative to what would occur under current law,” the CBO said in a Dec. 3 report. “Recipients of the additional benefits would increase their spending on consumer goods and services. That increase in aggregate demand would encourage businesses to boost production and hire more workers than they otherwise would, particularly given the expected slack in the capital and labor markets.”
The CBO said the positive effect would be partially offset by some people reducing the intensity of their jobs search and remaining out of work longer, but it said that negative effect would be “modest” because many of the jobs not taken by those people would be taken by people not eligible for long-term unemployment benefits.
Taking into account both the positive and negative effects, the CBO estimated that extending the benefits for a year would increase the GDP by 0.2 percent and create 200,000 jobs, though it also noted that an extension would increase the federal debt, which would negatively affect productivity and income over time unless action is taken to offset the increase.