Unemployment Benefits in Jeopardy for Hundreds of Thousands of Texans
About 128,000 Texans stand to begin losing unemployment benefits at the end of this month if Congress fails to pass an additional extension. As the deadline nears, here are some of the factors that will influence their decision:
Looking first at the bright-side, Texas has received nearly $5.7 billion in stimulus money for unemployment insurance extensions. Of the total unemployed population in Texas, nearly half are receiving help from benefits, up from 22 percent prior to the stimulus bill. More good news: Texas’ Center for Public Policy Priorities says the most recent report from the Council of Economic Advisers estimates that 225,000 jobs have been retained and created by the stimulus in Texas. Help for the out-of-work: good. Jobs for the out-of-work: also good.
But the picture isn’t all rosy. Texas, along with 26 other states, went through the Lord-help-me line in Washington for interest-free unemployment trust fund loans. The Department of Labor shows that so far, Texas has borrowed more than $1.5 billion – which makes the fact that Gov. Rick Perry refused to accept $555 million in (interest free) stimulus funds for unemployment in March of ‘09 because there were too many strings attached even more absurd. (Read News 8 Austin’s story here.)
“It’s official, recession hounds: The 26 states with insolvent unemployment insurance trust funds have now borrowed more than was borrowed during 1981 and 1982, the last time there was a severe recession in the U.S., and oft-used benchmark for when things are Officially Really Bad…States that cannot repay their loans before 2011 will face tens or hundreds of millions of dollars in interest payments.”
Yikes. Newly-elected spendthrifts have their work cut out for them.
As far as the much-bemoaned stimulus money goes, there’s no doubt that it has helped many out-of-work people. However, it’s inevitable that eventually the money from Washington will stop flowing. It’s just a matter of when. In an interview, Don Baylor, Senior Policy Analyst at CPPP, referred to the stimulus as a sort-of temporary “pain management” that was never intended to cure the ill economy.
While Baylor does feel that the economy is getting better, and that the stimulus has helped to create many jobs, near-full employment in Texas is still years away. He estimates that 1.7 million jobs will need to be created by 2015 to keep up with population growth and to return to pre-recession employment. This is a rate of close to 30,000 jobs per month.
What is the unemployment situation in Texas right now?
When the U.S. Bureau of Labor Statistics published their monthly regional and state employment report on unemployment for September, Texas was one of 23 states whose unemployment rate decreased, but only by .2 points.
As an aside, what’s really necessary when getting specific about numbers is to define what exactly the unemployment rate measures – if for no other reason than the fact that this figure is, for many people, what they use to determine whether or not the economy is recovering (… and whether or not the stimulus is stimulating).
The BLS classifies someone as unemployed if they “do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.” By this definition, the Bureau imprudently concludes that the unemployment figure covers more than the number of people who are actually out of work.
That’s just not so.
Let’s look at an example: Jack Smith, who was laid off, has been browsing jobs and asking around for leads, but hasn’t submitted his resume in a specific effort to get work in the last four weeks. He is not included in the unemployment figure, because he is considered out of the work force. It might sound like Mr. Smith is a bit of a lazy-bum, but he’s not alone. There are countless who’ve given up looking for work in this economy, after having been unemployed or without decent work in more than a year.
Another example: Jane Doe is 17 years old, and she has no job from which she receives payment. However, she does help with the regular chores around her father’s restaurant, for about 16 hours a week. She is counted as employed, falling into a group titled “unpaid family workers,” which includes people who worked without pay for 15 or more hours per week in a family-owned enterprise operated by someone in their household.
Clearly, this magic number isn’t quite as revealing as we’d like to think. It also doesn’t account for the percentage of Texans who are involuntarily under-employed – a figure closer to 13.7 percent.
All this being said, Congress has a lot of numbers to look at; and an extension doesn’t look likely. Many states are already in a tremendous amount of debt, and Don Baylor is certain that a key debate in the decision on whether or not to extend benefits for the jobless will be how to pay for it. That very caveat is the reason that GOP Senators already shut down one extension attempt back in September, titled the Americans Want to Work Act. The Huffington Post reported that Florida Sen. George LeMieux’s objection is: “…we need to know how we’re going to pay for [the Act] so we don’t put this debt on our children and grandchildren.” The Act would have provided 20 additional weeks of unemployment insurance benefits in states with unemployment rates above 7.5%; but it would not have paid back benefits retroactively to cover the period between when the last claim expired and the new claim took effect.
If electorates do succeed in passing an extension, what programs will they take money from to offset the cost? And if they don’t succeed, then what kind of pain management will there be for those suffering the withdrawal symptoms of the pain management?