12/07/2012 10:25 am ET Updated Dec 07, 2012

Jobs Report Sets Stage For Congressional Debate On Unemployment Benefits

WASHINGTON -- The U.S. Labor Department announced Friday that the national unemployment rate dropped two-tenths of a percentage point to 7.7 percent in November, setting the stage for lawmakers who must decide whether to preserve extended unemployment insurance or let the long-term jobless fend for themselves.

The declining jobless rate could give ammunition to Republicans wary of the $30 billion it would cost to keep the benefits through next year. But Democrats have said repeatedly that Congress has never dropped federal benefits when the unemployment rate is above 7.2 percent.

Federal unemployment compensation is scheduled to lapse on Dec. 29, abruptly cutting off 2 million people. The benefits are part of the so-called fiscal cliff, the nickname for when spending cuts are scheduled to take effect and the Bush-era tax cuts are set to expire at the end of the year. Congressional Democrats have demanded that long-term unemployment benefits be a part of any cliff deal.

Christine Owens, executive director of worker advocacy group the National Employment Law Project, said declining unemployment shouldn't diminish the government's commitment to helping the long-term jobless.

"We still feel like it's critical that the federal emergency unemployment program be extended," Owens said. "There is a cosmetic appeal to a declining unemployment rate, but it's very superficial in terms of assessing how severe the unemployment crisis really is."

Owens noted that the decline in the unemployment rate occurred largely because fewer people were looking for work and therefore did not count as unemployed.

Federal unemployment insurance kicks in for workers who use up six months of state-funded benefits. In states with a high unemployment rate, the benefits last for as long as 43 weeks. Nearly 5 million people had been out of work for at least six months in November, and 1.7 million had been jobless 99 weeks or longer. Both figures declined from the same time last year.

John Lorefice, 49, lost his job as a Long Island restaurant chain's sales and marketing director in October. Though he's only been unemployed six weeks, the small-time offers he's received so far have him worried he'll need more than six months to find a decent job. Lorefice said he's been watching Congress to find out what happens with unemployment insurance.

"I do have some time, but it is a concern being that you hear the horror stories of people out of work a year, people out of work three years," said Lorefice, who lives in East Moriches, N.Y. "I'm getting offers in the $20,000 range. That's insane. Someone else offered $30,000. It's pathetic."

It's also pathetically common. Much of the job growth in the past few years has occurred in low-wage occupations, according to an earlier analysis by the National Employment Law Project. Retailers, temp companies, and the hospitality industry accounted for 94,000 of the 146,000 jobs added to the economy in November.

Lorefice said he's not enjoying the online-only work search.

"What makes it daunting searching for the job, there's no contact," he said. "You can’t get in touch with anyone. It’s all done through the Internet. No way to stand out. No way to get an edge."



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