Federal Budget Deal Fails to Extend Unemployment Benefits for Over 82,000 Marylanders

Over 82,000 Maryland residents will lose their unemployment benefits in 2014 if federal lawmakers do not act to extend them. Last week, federal lawmakers agreed to a two-year budget agreement prior to adjourning for the holiday break, but failed to reach agreement on extending unemployment benefits for those still looking for work amid a sluggish economic recovery.

Maryland, like most other states, provides 26 weeks of temporary unemployment insurance to those that have lost their jobs. At the beginning  of the Great Recession began in 2008, Congress provided unemployed workers with additional benefits through the federal Emergency Unemployment Compensation program. But absent reauthorization, this program will expire at the end of the year. If Congress fails to act, almost 23,000 Maryland residents will lose benefits just after Christmas and another 28,500 will be cut off in the first six months of 2014. Further, absent reauthorization, those that lose their job in the first half of 2014 will see their unemployment benefits expire before the end of the year. In total, 82,600 Maryland residents will lose their unemployment benefits.

While emergency unemployment benefits are intended to phase down as the economy recovers, many are still having trouble finding jobs in a labor market that has yet to fully recover from the great recession. Indeed, there are still 1.5 million fewer jobs available in the national economy than there were prior to the start of the Great Recession six years ago, and almost 3 unemployed citizens for every job opening.

This is a problem, particularly since over 37 percent of those out of work are part of the ‘long-term unemployed,’ or those who have been out of work for six months or longer. According to the Economic Policy Institute, there are three times more long-term unemployed now than there were before the recession. Those who have been out of work for long stretches of time have a particularly hard time finding work, as studies show that employers are less likely to consider them for jobs.

These factors, combined with the unprecedented nature of the current long-term unemployment problem, should compel Congress to act on their behalf. As the Center on Budget and Policy Priorities points out, the long-term unemployment rate is at least twice as high now as when federal lawmakers have allowed emergency unemployment benefit to expire following previous.

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Besides the toll on the unemployed and their families, the failure to extend unemployment benefits has economic impacts as well. If benefits expire, job-seekers will have considerably less money to spend, which will reduce demand in the economy. The result would be a nationwide loss of 240,000 jobs in 2014, according to the Department of Labor. Further, rather than serving as a disincentive to look for work, the National Employment Law Project shows that unemployment insurance, by helping job seekers and their families pay for basic necessities, enables them to actively engage in the job hunt.

While securing a budget deal is an important step, lawmakers must do more to ensure full economic recovery and support citizens still trying to weather the Great Recession.

Check back for more coverage on the budget and its effect on federal workers in Maryland. 

Survey Results Highlight Economic Anxiety Among Workers, Importance of Assistance Programs

Many Americans are still feeling the effects of the Great Recession, and the recovery thus far has been skewed toward the wealthy. As the economic and employment prospects of moderate and low income Americans remains tenuous, safety net programs for those who face economic hardship are increasingly important, but remain under attack.

Yesterday, the Washington Post highlighted the difficulties that moderate and low-income Americans continue to face in an uncertain economy. In an article that centered on the findings of a University of Virginia survey and others, the Post vividly described the anxiety that workers face, and how their feelings about their prospects have worsened over time. To summarize:

Current Attitudes	Comparison from Previous Surveys
54 percent of workers making $35,000 or less worry “a lot” about losing their jobs	37 percent of workers making $35,000 or less worried “a lot about losing their jobs in 1992 and 1975
85 percent of lower income fear that their families’ income will not be enough to meet expenses	60 percent of lower income feared that their families’ income will not be enough to meet expenses in 1971
32 percent of low income workers worry all the time about meeting expenses	This is almost three times the number of people who felt this way in the 1970s
More than 6 in 10 workers worry they will lose their jobs because of the economy	According to the Post, today’s worries exceed those in 1975, a time of recession marked by high unemployment and high inflation.

These finds bring into stark relief the way in which low and moderate income workers have been left out of the economic recovery since the great recession. At a time when the stock market is reaching record highs, the University of Virginia survey shows that many feel like their economic prospects have only worsened in recent years.

Economic anxiety is particularly acute among low income workers. Intense worry about possible job loss is 29 percent, among workers with incomes between $35,000 and $75,000, and drops to 17 percent for those with incomes above that level. This is the result of increasing inequality, stagnating wages, and declining wages among those with low incomes. Since 2000, average household incomes for the poorest 40 percent of workers have fallen by more than 10 percent, according to the Post. As we showed in our State of Working Maryland 2012 report, while incomes for most have stagnated, incomes for the wealthiest residents have increased dramatically:

Change in Real Annual Household Income by Income Group, 1979-2007

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Data source: Congressional Budget Office, 2010

In this context, government safety net programs play an important role in assisting those whose worst economic fears are realized. However, these programs face erosion and attack, as unemployment benefits for 2.1 million workers are set to expire at the end of the year absent Congressional action, and nutrition assistance benefits have already decreased after being expanded by the post-recession economic stimulus and face calls for further reductions from lawmakers. In their ‘Hardship in America’ series, the Center on Budget and Policy Priorities highlights the tough times that many workers face and the programs that help alleviate poverty, such as the Earned Income Tax Credit, housing and food assistance, and unemployment benefits.

Fortunately, Maryland maintains important programs to help moderate and low-income workers such as its own Earned Income Tax Credit and expansion of Medicaid which starts in 2014. As state lawmakers face tough decisions on the state’s budget in the upcoming legislative session, it is important that they prioritize the economic security of Maryland’s workers and maintain and expand programs that help workers amid an economic recovery that has largely excluded them.