In one month, one million Americans are slated to lose their unemployment insurance. Millions more will follow. According to Judy Conti, Federal Advocacy Coordinator at the National Employment Law Project, the expiration of this vital lifeline “would be a catastrophe for these families and their communities.”
Why is unemployment insurance expiring?
When reckless Wall Street gambling collapsed the global economy, Congress stepped in and quickly extended unemployment insurance, food stamps and other support programs for millions of Americans. Congress extended benefits once more until February 28, 2010. The hope was that by that time, the economy would be picking up and creating new jobs.
But the truth of the matter is that no new jobs are being created. In fact, in December, 85,000 Americans lost their jobs. This is an improvement over previous months, but it was also ten times the number analysis predicted.
The stimulus package and emergency measures passed by Congress to help workers were big, but the hole blown in the economy by Wall Street greed and recklessness was is even bigger. Twenty-six million Americans are now unemployed or can’t find full time work. Job loss is now driving the foreclosure rate, and economists predict that we may not approach normal levels of employment for five years or more.
Because employment is slow to grow, income support will be needed by many more Americans for years to come. That is why Senator Jack Reed (D-RI) is pushing a plan to aid the 17 states that currently have “work share” programs and wants to help all states start similar programs. Work share allows employers to retain skilled workers during economic downturns by reducing the work hours of a larger group of employees. Employees whose hours and wages are reduced would be eligible to receive a portion of their regular unemployment insurance benefits to compensate for the lost wages. Germany has undertaken an aggressive work share program and has successfully kept its unemployment level lower than many of its European neighbors, ameliorating the hardship on its workers and supporting the economy as a whole.
Mark Zandi, top economist at Moody’s Investor Services, says that this type of income support is the “most efficient way to prime the economy's pump.” Zandi calculated that for every $1 in unemployment benefits the government spends, it creates $1.69 in economic stimulus for the businesses in the communities where recipients live.
Moreover, the Washington-based Economic Policy Institute calculated that if this income support were withdrawn and these dollars were to stop flowing through local supermarkets, pharmacies, utility providers, and lenders, an additional 800,000 jobs could by lost by the end of 2010.
We are in a big hole and it is going to take big ideas to climb out of it. In the mean time, the more workers and families that we prevent from slipping into the abyss, the better off we all are. Tell Congress to take swift action to stop the bleeding and renew unemployment insurance now. Send a letter to your member of Congress at www.BanksterUSA.org.