Congress Renews Unemployment Insurance, But Reduces Benefit Durations Over Remainder of 2012

Share    

Overcoming efforts to dismantle federal unemployment insurance and undermine the basic UI system, Congress today approved a compromise payroll tax rate extension that also averts a threatened March 1st expiration of federal jobless benefits.  Under the plan, the federal unemployment insurance program for long-term unemployed job-seekers who exhaust regular state benefits is continued, while maximum durations of benefits are reduced in stages over the remainder of 2012.

While preserving this essential lifeline for millions of unemployed job-seekers and their families, Congress also rejected the far more drastic and immediate cuts House Republicans had sought, and largely avoided the worst features of the proposals contained in the original House bill that aimed to stigmatize and demonize long-term unemployed workers, like the GED requirement.

The reauthorization of federal unemployment insurance approved today would provide a maximum availability of UI benefits during the rest of 2012 of:

• Up to 89 or 99 weeks through May, depending on the state and its 3-month average unemployment rate
• Up to 79 weeks through August
• Up to 73 weeks through December

Under the plan, current levels of Emergency Unemployment Compensation (EUC) benefits are maintained through the end of May.  During that period, though, it is expected that nearly all 33 states that also provide an additional 13 or 20 weeks under the Extended Benefits (EB) program will no longer be eligible for those funds due to declining unemployment rates or rates that are no longer 10% higher than their rates in the prior three years.  To partially compensate for the loss of EB, those states would be eligible for an additional 10 weeks in Tier IV of EUC -- for a total of 16 Tier IV weeks in eligible states.

Beginning in June, and then again in September, changes to some unemployment rate triggers and weeks of available benefits in EUC Tiers will occur.

Number of Unemployment Insurance Benefit Weeks

Under 2011 Law Compared to New Law Through 2012

 

 

 

(Required unemployment rates in parentheses)

2011

Law

March

through

May

June

through

August

September

through

December

 

Regular State Benefits 1

 

26

 

26

 

26

 

26

­­

Emergency Unemployment Compensation

 

 

 

 

 

Tier 1

 

20

 

20

 

20

 

14

 

Tier 2

 

14

 

14

14

(6.0%)

14

(6.0%)

 

Tier 3

13

(6.0%)

13

(6.0%)

13

(7.0%)

9

(7.0%)

 

Tier 4

6

(8.5%)

6

(8.5%) 2

6

(9.0%)

10

(9.0%)

 

Extended Benefits 3

13 (6.5%)

20 (8.0%)

13 (6.5%)

20 (8.0%)

 

‐‐‐

 

‐‐‐

 

Maximum Number of Weeks

 

99

 

99

 

79

 

73

 

1 In 2011, Arkansas, Florida, Illinois, Michigan, Missouri, and South Carolina reduced the maximum number of regular state UI from the standard 26. This means that new claimants of regular state UI as of the effective dates of the new rules in those states will receive a reduced number of federal extension weeks. Details in order of effective date are below:

• Arkansas reduced the maximum duration to 25 weeks, effective March 30, 2011.

• Missouri reduced the maximum duration to 20 weeks, effective April 13, 2011.

• South Carolina reduced the maximum duration to 20 weeks, effective June 14, 2011.

• Florida implemented a sliding scale, effective January 1, 2012. The maximum duration is 23 weeks if the state's unemployment rate is at least 10.5 percent. The maximum decreases by one week for every 0.5 percentage point drop in the state's rate, to a minimum of 12 weeks at 5.0 percent unemployment.

• Illinois reduced the maximum duration to 25 weeks, effective January 1, 2012.

• Michigan reduced the maximum duration to 20 weeks, effective January 15, 2012.

2 States eligible for Tier 4 benefits that trigger off of Extended Benefits between March and the end of May are eligible for 10 additional weeks of Tier 4 benefits during this period.

3 Technically, Extended Benefits (EB) will be available in states throughout 2012 under an extended three‐year look‐back. For example, the District of Columbia and Idaho are estimated to trigger off of EB in October, assuming their current three‐month average unemployment rates do not change. This is reflected in the table displaying the number of weeks. In practice, however, NELP expects that only one or two states will continue to meet the eligibility criteria after May due to gradually declining state unemployment rates.

National Employment Law Project

While the renewal of federal unemployment insurance through the end of the year is a relief to the millions of job-seekers who rely on these modest benefits while they look for work, the bill is far from what unemployed workers need and advocates sought.  By agreeing to demands that this federal UI extension not be provided under emergency-funding, lawmakers could have sought minor tax increases on the wealthiest among us to help pay for the program.  But, again, millionaires, hedge fund managers and wealthy investors were let off the hook.  Instead, middle-class federal workers are being hit with pension contribution increases and more pay freezes.  And there are a number of troubling provisions and some omissions in what is clearly a compromise measure.

"We remain concerned that cuts to the program are being made too soon, while unemployment is still too high and robust job growth is not yet sustained," said Christine Owens, executive director of the National Employment Law Project. "While unemployment has been falling and job growth rising, economic projections still show high unemployment for many months to come. If, as we hope, the recovery gathers even more steam and job creation becomes more robust, what unemployed workers and their families need most—jobs—may become available before benefits run out.  If not, it will be important for Congress to revisit the continuing crisis of long-term unemployment, especially for workers who may exhaust all federal unemployment insurance under this compromise before finding work," Owens said.

Indeed, the potential is great for workers who have not found new jobs to exhaust federal UI benefits sooner under the new plan -- adding to the swelling numbers of those whose benefits have run out even as they continue to look for work.  Despite advocates' efforts to include robust funding for jobs and reemployment services that would extend to those workers as well as other long-term unemployed Americans, the bill passed today includes only modest funding for training evaluation and reemployment services geared to federal UI claimants.

And while the blanket approach allowing states to require drug-testing of all unemployment insurance claimants was left out of the bill, some narrowly-defined drug-testing of certain applicants would be allowed.  Also troubling are provisions that would offer federal waivers to a limited number of states looking to enact employer-based wage subsidy "demonstration projects" using unemployment insurance funds.

On the plus side, federal support is included in the bill for states enacting work-sharing programs.  These programs help companies avert layoffs, allowing them to retain workers at reduced hours in place of layoffs, while providing some compensation for lower pay with partial unemployment insurance.

We will have more complete analyses, data and explanations of the new law in the days ahead.

Still, for the most part, the attempts to "welfare-ize" unemployment insurance were averted in the bill.  Thanks in no small part to the many tens of thousands of unemployed workers and supporters throughout the country, who made thousands of phone calls and sent more than a quarter of a million email messages to Congress through our website during the past four weeks, we can say we have preserved the most important social insurance program the nation has for millions of long-term unemployed job-seekers.

See all blog entries »