Extended jobless benefits near end

Extended jobless benefits near end

November 28th, 2010 in News

Before this year, Ken Gibson always has been able to find work fixing computers or doing maintenance or construction jobs.

But since he was laid off from his pipe-fitting job at Jake Marshall Services in March, the 52-year-old Chattanoogan has had to rely upon his $207 weekly jobless benefit check from the government.

"I've never seen it this bad; it's been a miserable year for my wife and [me]," Gibson said after searching for work again last week at the Tennessee Career Center in Chattanooga. "I don't know what I'll do when my benefits run out."

Gibson is among more than 125,000 unemployed people in Tennessee and Georgia who could lose their extended jobless benefits this winter unless Congress approves an extension. Nationwide, nearly 2 million Americans could lose their extended benefits by the end of the year.

Before the Thanksgiving break, the U.S. House of Representatives fell short of the two-thirds majority needed to fast-track another extension. Republicans objected to the $12.5 billion cost of another three-month extension without cutting spending elsewhere. Benefits will begin to expire Wednesday.

U.S. Rep. Zach Wamp, R-Tenn., could cast one of the last votes in his 16-year congressional career on the benefit extensions if the House takes up the issue when Congress reconvenes this week.

"I think we should extend these benefits, but we've got to find a way to start paying for these things," Wamp said. "If the November elections this year were about anything, they were to quit just borrowing money and start cutting some government programs to pay for what you are spending on."

Wamp's successor, Rep.-elect Chuck Fleischmann, said he hasn't decided if he would support another extension of jobless benefits should the issue arise again next year.

"I do think we've got to have fiscal responsibility and really rein in government spending," he said.

Earlier extensions stretched benefits for some long-term unemployed people to 99 weeks -- the longest since the benefits were established during the Great Depression.

"We've never experienced a downturn like this since the 1930s," said Georgia Labor Commissioner Michael Thurmond, an advocate for extending benefits again. "We have just not had the job growth necessary to get the unemployed back to work. Having no job or no unemployment benefits equals misery for millions of Americans."

Debate over benefits

Thurmond rejects claims that many unemployed people don't want to work as long as they get jobless benefits.

"There may be a few people who game the system, but the vast majority of people would trade an unemployment check for a paycheck any day of the week," Thurmond said. "Unfortunately, today we have five job seekers for every job opening."

But the economy is beginning to improve, and some argue that continual extension of jobless benefits discourages workers from seeking new jobs.

"Sometimes a good way to see unemployment numbers go down is to cut unemployment benefits," said Scott DesJarlais, the Republican physician from Jasper elected to succeed U.S. Rep. Lincoln Davis, D-Tenn., in Tennessee's 4th Congressional District.


* 2 million: Jobless Americans who could lose extended benefits if Congress doesn't approve another extension.

* 43,425: Tennesseans who could lose extended benefits

* 84,000: Georgians who could lose extended benefits

* $275: Maximum weekly unemployment benefit in Tennessee

* $330: Maximum weekly unemployment benefit in Georgia

* 127,184: Tennesseans getting unemployment benefits

* 210,769: Georgians getting unemployment benefits

Sources: National Employment Law Project, Tennessee Department of Labor and Workforce Development, Georgia Department off Labor

"There are jobs that people may not want to take that they would if their unemployment benefits were cut," DesJarlais said.

Nationwide, the average jobless benefit is $310 a week, or $20 a week more than working full time at a minimum-wage job. The average benefit in Tennessee and Georgia is less than $225 a week.

Bill Fox, director of the Center for Business and Economic Research at the University of Tennessee, said many jobs in home construction and financing may never return to the levels they stood at before the recession. Other jobs continue to be automated or to move to lower-wage countries, he said.

"There are many jobs that are lost and probably won't be coming back even once the recession is over," Fox said. "This is a situation that will be with us for quite a while and is causing real structural, long-term changes in the labor market."

Rose Burns, 34, lost her job in early 2009 when R.L. Stowe closed its Chattanooga textile mill. The extended jobless benefit of $225 a week has helped make it possible for her to pursue a new career in social work at Chattanooga State Community College.

"The benefits help out a lot and are almost better than getting a fast-food job," she said.

Trust fund challenge

State unemployment insurance funds are financed by a payroll tax on employers, and pay benefits to workers for the first six months of unemployment. The extended benefits, as well as the related trade readjustment assistance for workers who lose their jobs to imports, are paid by the federal government.

The recession drained most state funds, forcing 32 states to borrow money from the federal government to keep paying jobless benefits.

Tennessee's fund stood at more than $600 million two years ago, but even though employer tax rates were raised in 2009, the state borrowed $50 million earlier this year to overcome a short-term shortfall.

Fox said another shortfall could develop and require more borrowing in March, but under law the state fund must be debt-free by the end of its fiscal year on June 30.

Georgia has borrowed $467 million after draining a $1.2 billion surplus before the recession hit.

"We'll be able to repay the loan once the economy eventually recovers and jobs come back," Thurmond said.

Extended jobless benefits in Georgia pump more than $18 million into the state's economy every week.

"The primary purpose of unemployment insurance is to mitigate the damage to local economies," Thurmond said. "This helps not only the recipients but others who rely upon unemployed persons still being able to buy groceries and pay their rent while they look for another job."

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