More than 69,000 Hoosiers would lose long-term unemployment benefits next year unless Congress acts in the next few weeks to extend them, the White House said.
Republicans argue that the extra federal benefits — which go beyond the 26 weeks of state help for the unemployed — already have cost too much. Democrats say the unemployment rate still is too high, and will get worse if the aid isn’t extended — because of the spending the benefits pump into the economy.
“This is obviously devastating for these individual families trying to put food on the table,” Betsey Stevenson, a member of President Barack Obama’s Council of Economic Advisers told reporters. But “it’s actually a crucial program for our economy because when these families are cash strapped (and) don’t have access to credit, their reduction in spending hurts all of us.”
The program already has benefited more than 600,000 Hoosiers since it was signed into law by President George W. Bush in 2008. It has been extended multiple times and is set to expire at the end of the year.
House Republicans argue that the program already has served up about 10 times as many weeks of extended benefits as the last time the federal government offered extra benefits following the 2001 recession and terrorist attacks. And Republicans say the program has been nearly six times as generous as a similar program that ran from 1991 through 1994.
“If the president has a plan for extending unemployment benefits, I’d surely entertain taking a look at it,” House Speaker John Boehner said Thursday. “But I would argue, the president’s real focus ought to be creating a better environment for our economy and creating more jobs for the American people. That’s where the focus is, not more government programs.”
The White House counters that none of the previous emergency aid programs were allowed to expire until the unemployment rate was closer to 5 or 6 percent. The unemployment rate is 7.3 percent nationally and 7.5 percent in Indiana.
Based on Indiana’s 7.5 percent rate, unemployed Hoosiers can get an additional 37 weeks of assistance, after the state’s 26 weeks run out. Currently, the average length of time someone is unemployed nationally is 36 weeks.
The average weekly benefit in Indiana is $242. That’s the seventh lowest among states, according to the White House.
About 18,800 Hoosiers are currently receiving extended benefits, according to the Indiana Department of Workforce Development.
The White House estimates that if the program is extended through 2014, about 69,300 Hoosiers would benefit. And there would be 3,406 more jobs in Indiana because of the economic benefits of people spending money they wouldn’t otherwise have.
The Indiana Department of Workforce Development, however, said Hoosiers are filing initial claims for unemployment benefits at the lowest levels since 2000.
“We’re just not seeing the traffic that we used to see,” said department spokesman Joe Frank.
Some have argued that unemployment benefits reduce the incentive for people to find another job.
Derek Thomas, senior policy analyst for the Indiana Institute for Working Families, said that view doesn’t account for the type of jobs available. Thomas said that Indiana has more jobs with wages below what’s needed for economic self sufficiency than all of its neighboring states.
“It’s not just a matter of going out and finding a better job,” Thomas said. “We need to start providing a toolbox for families so we can restore economic mobility to Hoosiers.”
While the institute supports extending the federal unemployment program in the short-term, it’s also advocating that the state create a “work sharing program” that allows an employer to reduce hours and wages instead of laying people off. Workers with reduced hours can get partial unemployment benefits.
“It allows workers to avoid the well-documented harmful effects of long-term unemployment,” Thomas said.
The nonpartisan Congressional Budget Office estimates that extending the federal benefits for another year would have only a modest effect on keeping people from finding jobs faster. That’s because most of the jobs that would not be taken by those receiving the additional benefits would instead be taken by some of the many people searching for work who would not be eligible for those benefits, CBO said.
The budget analysts also said extending benefits would boost employment and the economy next year. But it would add $25 billion to the deficit over the next 10 years, which would eventually slightly hurt the economy unless that cost is offset.