Some find fault in job benefits' extension

Last Updated 29 November 2011, 13:22 IST

Still, he opposes President Barack Obama’s call for Congress to renew extensions on unemployment benefits.

“They’re going to end up spending more money on unemployment benefits, while less money is coming in on tax returns,” he said, suggesting that the government should focus on measures that might encourage businesses to hire. “Far better to relax some of these outrageous regulations.”

Make no mistake - Tolleson, 54, has collected unemployment checks, saying he had little choice. But his objection to a policy that would probably benefit him shows just how divisive the question has become of providing a bigger safety net to the long-term jobless, a common strategy in recessions.

Obama wants to continue offering benefits for an extended period of time, a maximum of 99 weeks, as is now the case. The measure is part of his jobs bill, which he once again called on Congress to pass in a news conference recently.

If the extension is not renewed, benefits for more than 2.2 million people will be curtailed by mid-February, according to the Department of Labour. The Obama administration estimates that with no extensions, a total of 6 million people will run out of benefits over the course of next year.

Unless job growth picks up sharply, many of those people will struggle to stay out of poverty. Unemployment benefits, which average $298 a week, help families and serve as economic stimulus because most of the money gets spent right away on basics.

Liberal and many centrist economists say that the economy is too weak now to withstand the shock of a sharp drop in those payments. Still, conservatives contend that extending benefits pulls money from other parts of the economy, discourages people from finding work and increases the unemployment rate. Some Republican politicians have gone so far as to suggest that people living on unemployment are simply lazy.

 Even Obama’s pick for head of the Council of Economic Advisers, Alan B Krueger, has acknowledged that increasing unemployment benefits prolongs unemployment, as conservatives pointed out when he was nominated in August.

To some taxpayers, unemployment extensions are just another big-government expenditure that comes out of their pockets and goes into someone else’s. Some would rather see the money spent on projects with a return, like building highways and schools. Others prefer freeing businesses of expenses like the health care plan and new regulations.

Even among those struggling to find work, Tolleson is not alone in his views. In a recent survey of the unemployed by Rutgers University, more than 1 in 4 respondents was opposed to renewing the current extended unemployment benefits. Three out of five said recipients should be required to take training courses.

Tolleson, who lives in Houston and whose last good job was working for a group that aims to replace the income tax with a national sales tax, said he filed for unemployment after a church said it could not help him otherwise. But, he said, he knows the money is not free.

“They either tax it from somebody who’s making money or they’re going to print it,” he said. “Either way, the economy goes down.” Theresa Gorski, a pharmaceutical sales rep in Detroit before losing her job 17 months ago, once shared his skepticism of prolonging unemployment benefits.

“If you would have asked me five years ago, I would have said no, because I always considered myself a Republican,” said Gorski, 50. “But now being in this position, with a college education and lots of work experience behind me, I find myself swinging more liberal, and more Democrat. And that would never have happened before.”

This recession has left more people unemployed for longer than ever before. In September, nearly 7 million people were receiving unemployment benefits, and the Census Bureau says the payments lifted more than 3 million people out of poverty last year. Keeping the extensions in place for another year would cost $49 billion, the White House estimates.

Unemployment benefits vary from state to state and are based on the worker’s previous earnings, with most states using a tax on employers to cover 26 weeks after a job loss.
In mid-2008, the federal government began to pay for a series of extensions that brought that total to 99 weeks in the states with the highest unemployment rates. About 20 states now offer the maximum of 99 weeks, but under Obama’s proposal, that would drop to nine states in March and three in April. That would leave most states offering about 70 weeks of benefits.

Republican leaders in Congress have not said whether they will support the extensions, but they have opposed them in the past. In a congressional hearing recently, they expressed frustration that repeated renewals of the extensions had not yielded better results.

Economists generally agree that unemployment benefits encourage some job seekers to delay accepting a job, thus raising the unemployment rate. A study by the San Francisco Federal Reserve last year found that the benefit extensions had increased the rate by four-tenths of a percentage point.

A more recent paper by Jesse Rothstein, an economist at the University of California at Berkeley, found that about half the increase was simply because recipients were required to look for work and therefore continue to be counted in the labor force. Otherwise, many would have dropped out. Only people actively looking for work are counted among the unemployed.

Although his nomination was approved by a Senate committee recently, Krueger is avoiding speaking publicly as he awaits confirmation.  That has prevented him from defending himself to those conservatives who have happily cited his acknowledgement that benefits may prolong unemployment.But he has written that the impact was likely to be smaller in a harsh economic climate.

In a study conducted between fall 2009 and spring 2010 in New Jersey, Krueger and his co-author, Andreas Mueller, found that only one out of five unemployed people had received a job offer, and that workers did not spend more time looking for work or lower their acceptable salary level after their benefits lapsed.

In interviews, job seekers insist they are applying for jobs at salaries far below what they are used to, in fields they have never worked in before, and are still not having any luck.Preston Venzant, 47, who lost his job in Houston repairing commercial kitchen equipment, said he had decided not to apply for unemployment benefits over the objections of his wife.

“I don’t want the federal government giving me an incentive not to work, period,” he said. “My personal opinion is, you’re supposed to go find work, and if you can’t find it in the business that you were once in, be it a CEO or a street sweeper, you have to find employment and your lifestyle has to change, so be it.”

After months of looking, Venzant said, he has gotten an offer that will give him two years of work, with free room and board and five weeks’ vacation. All he has to do is move to Russia.

(Published 29 November 2011, 13:21 IST)

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