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Long-term Unemployed Face Harsher Environment

February 23, 2012

Despite the extension of emergency unemployment benefits along with payroll tax cuts through the rest of the year, the long-term unemployed are confronting a challenging economy.

A report released last Friday by the Government Accountability Office found that of the 15 million workers who lost jobs from 2007 to 2009, half of them received unemployment insurance benefits, but about one-fourth of the recipients had exhausted their UI benefits by January 2010. That represents 2 million displaced workers who exhausted their UI benefits as of early 2010. The Labor Department has estimated that approximately 3.5 million more individuals exhausted their benefits in 2010 and 2011.

The 2007-2009 recession was the most severe since the 1930s, leading to a net loss of 7.5 million jobs, the GAO noted. Currently, through benefit extensions authorized by Congress, eligible displaced workers can receive UI benefits for up to 99 weeks in certain states. However, with the slow economic recovery, many of the unemployed may their exhaust UI benefits without finding a new job. This raises questions about how Temporary Assistance for Needy Families, a program that provides cash assistance to low-income families with children, and other support programs are helping those who have exhausted their unemployment benefits.

Many of the displaced workers who exhausted their unemployment insurance benefits by January 2010 have faced difficult economic circumstances, the GAO noted. Their unemployment rate was high—46 percent in January 2010. Most, however, appeared to have worked at some point in 2009 or to have been supported by another household member who was working, and some had income from assets, such as interest or dividends.

Nevertheless, the poverty rate of displaced workers who exhausted their UI benefits was higher than the rate among working-age adults—18 percent compared to 13 percent. More than 40 percent had relatively low incomes, below 200 percent of the federal poverty threshold, the GAO noted.

Less than 3 percent of the households of those who exhausted their unemployment insurance benefits received Temporary Assistance for Needy Families benefits in 2009. Most would not have qualified for TANF because they did not have children age 18 or younger. More of these households received benefits from Social Security programs (18 percent) and the Supplemental Nutrition Assistance Program (15 percent), formerly known as the Food Stamp Program.

While there are no federal requirements to refer those who have exhausted their UI benefits to other support programs, 45 of the state unemployment agencies that GAO surveyed reported providing them with information or connecting them to support programs in a variety of ways, such as through the Web, mail, staff referrals, and interagency coordination. Washington State, for example, has a multiagency workgroup which has developed a resource guide that was mailed to those who have exhausted their UI benefits. They have posted it online and established a phone number to handle questions from these individuals.

The unemployment extension that Congress passed last week and that President Obama signed into law on Wednesday will only help those who have been unemployed for less than 99 weeks, and not even that much in many states. However, the maximum amount of time they can stay on unemployment will be gradually scaled back to a maximum of 73 weeks. The legislation also imposes new requirements on unemployment recipients, such as allowing states to promote the re-employment of unemployed workers through demonstration projects, and to require drug tests, but only for people who were fired for unlawful use of controlled substances. It also creates a national job search standard, covering benefits from beginning to end, and requires the unemployed to look for a job if they receive unemployment benefits, while expanding work-sharing programs to help avoid layoffs.

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