There are currently over 4.5 million people on Emergency Unemployment Compensation, the program that was formed (and repeatedly extended) because of our historical downturn and joblessness. That act is set to expire on January 1, 2010.
Unemployment insurance is complex at this point. The first 26 weeks goes under the traditional state unemployment, after that there are various emergency Federal programs that have different tiers that last different amounts of time. Some programs are available in some states and not others, based on the unemployment rate.
Once the program expires, people that are locked into a tier will receive benefits but no one can move on to the next tier. This will create a weird situation where there will be many people that have been out of work relatively briefly (26 weeks if it ends after the new year) that will get cut off, while some people will have received benefits for nearly two years and continue. In either case, joblessness is still systemic and even in a best case scenario there will be several more years before the bulk of the unemployed can find work. In addition, we’re going to see another large spike in layoffs in the first month of the year, over 3.5 million to be precise, and I’m not optimistic that most of those people will get picked up again for a while; plus they will be competing with the 9.5+ million that are currently on the unemployment insurance rolls.
The end result is that close to one million people are projected to have their uninsurance run out during January, with three million by March. The House put an extension into the recently passed jobs bill, but that bill has so many different parts that it will be challenging to get it through the Senate quickly. The Senate wrangled for weeks on the last extension, which was only won because they also extended the housing credit which cost 10x more than the unemployment extension and was roundly criticized by economists.
I wouldn’t be surprised if it takes months this time — if at all — and the Senate won’t even start until next year, at which point people will be falling off the rolls.
From the very beginning I said my worst fear was that once we got a quarter or two of growth that politicians would declare the recession over and cut off the millions of people that are on their last leg. Thus far there has been no attempt to treat the situation as systemic and if the job market doesn’t improve quickly to record levels then we are almost guaranteed to see another recession and huge political and increasing social strife if there is no extension.
I would be grateful if people have ideas on the best way to help that may not have received traditional attention.