It seems that unemployment benefits may be set to expire. When Congress passed a budget deal last week, they failed to extend the program that provides federal unemployment benefits to the long term unemployed. As a result, unemployment benefits for anyone depending on federal unemployment assistance will stop this week. Federal benefits normally start when state benefits run out and can extend the overall benefit period by almost a year. Although the federal benefit checks are usually less than the state checks, they have provided extended relief to many who have not been able to find employment during the state benefit period.
Michelle Marshall is one of those who will be affected by the expiration of federal unemployment benefits. Michelle lost her job as an administrative assistant about a year ago and started collecting $624 per week from the State of New Jersey. When her state benefits ran out after 16 weeks, she started collecting $521 per week in federal unemployment benefits. As of this week, she will stop receiving these checks. Marshall had to consolidate her credit cards and apply for mortgage assistance when her unemployment was cut from the larger state amount to the lower federal benefit. Now she says she will apply for food stamps and might lose her car which will impact her ability to look for a job.
The program which has provided federal unemployment assistance to those who are still unemployed after the state benefits expire was first signed into law by President George W. Bush in June 2008. At this time, the unemployment rate was 5.6% and the average unemployment insurance claim lasted 17 weeks. However, at the height of the Great Recession of 2009, the unemployment rate increased to over 10%. The program providing federal unemployment assistance was extended to accommodate these increased numbers and, because of the weak recovery, has been expanded or extended 11 times since then.
According to the Obama administration, the end of federal unemployment benefits could have a major impact on the economy. The Department of Labor and The White House Council of Economic Advisers issued a joint report earlier this month explaining how unemployment benefits boost the economy and keep 2.5 million Americans above the poverty level each year. The White House stated that an expiration of benefits could reduce the U.S. GDP by as much as 0.4% in the coming year. On the other hand, the cost of extending the federal unemployment benefits for another year will cost the government about $26 million. House Minority Leader Nancy Pelosi stated that the first item on the Congress’ agenda in 2014 should be an extension of unemployment insurance. In addition, people like Michelle, who are set to lose benefits, are urging Congress to take action.
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