Thursday, December 2, 2010

Congress must not slam the breaks on the nation’s tentative economic recovery

The program providing emergency unemployment benefits to expired Tuesday, even while the labor market remains remarkably tight with the national unemployment rate at 9.6 percent and Colorado's unemployment rate at a 23-year high of 8.4 percent. Congress failed to extend the emergency benefits on Friday, but our representatives can still do the right thing for the economy and unemployed workers. Here's an opinion piece the Colorado Center on Law and Policy submitted to local newspapers last week setting out the issues.

Christine Murphy
By Christine Murphy

Economic recovery? Few among us can see it, even though the official timekeepers tell us the Great Recession ended in June 2009. Nearly everybody knows somebody at church, school or down the block who was laid off months ago and has been unable to find work, despite continued heroic efforts.

That’s precisely why Congress must not slam on the breaks to our economic recovery by terminating the federal emergency unemployment insurance (UI) program for jobless workers. It will expire Nov. 30 if Congress fails to act.

Terminating the federal UI system would leave 41,000 unemployed Colorado workers during December alone without the money they need to pay mortgages, buy food and cover other basic expenses that support their families. Tens of thousands more Colorado workers would exhaust benefits each month after that. Eliminating emergency benefits would be a severe blow to the economy, removing badly needed consumer spending that sustains jobs, small businesses and local communities.

Our state is still reeling from the Great Recession, the deepest and longest economic downturn since the 1930s. Unemployment remains high in Colorado at 8.4 percent, the highest rate in nearly a quarter-century.

To put that figure in perspective, consider that Colorado has lost some 142,800 jobs since the onset of the downturn. That’s a population of workers larger than the entire city of Fort Collins – people producing goods and services, spending paychecks and contributing to their communities – suddenly removed from Colorado’s economy but for the modest unemployment insurance benefit they receive.

Today, more than 223,000 Coloradans are struggling to find work. The economy is recovering, but with only one job for every five unemployed workers, it’s going to take time for workers to get back to work and back on their feet.

Situations like this are exactly what the emergency unemployment insurance program was designed for. Emergency unemployment benefits help workers stay afloat until they can find new jobs, and help kick-start the economy by allowing unemployed workers to continue to buy basic goods and services, creating a positive cycle of job creation. As more jobs are created, the economy enters a self-sustaining period of recovery. The availability of more jobs means unemployed workers need less time to find work, and the emergency extension of unemployment benefits can be phased out.

But we are a long way from that positive cycle. The national unemployment rate is 9.6 percent and expected to be above 9 percent throughout 2011, which is why Congress should extend emergency unemployment through the end of next year. Terminating emergency benefits now or extending them for only three additional months, as some are proposing, would pull the rug out from under our fragile recovery. In every recession since World War II, Congress has extended the time workers can receive benefits at least until the market recovers. It should do so again today.

Some observers have raised concerns over how maintaining the emergency benefits would add to the federal debt. This extension would not affect the debt in any significant way, and as emergency spending, the UI extension should not have to be paid for with other spending cuts. Moreover, if Congress fails to maintain emergency benefits, millions of people will lose all or most of their income and be forced to seek assistance through other government programs that cost money and contribute to the debt.

More importantly, failing to extend the federal emergency UI program would also risk prolonging and even worsening the effects of the downturn, which is a much bigger factor for the federal debt than a temporary extension of an emergency program that has proven to stimulate the economy.

When Congress gets back to work, it must help get America back to work. Congress should maintain the federal unemployment insurance program for one year and pave the way for a full economic recovery.

Christine Murphy is executive director of the Colorado Center on Law and Policy, a Denver-based organization that advocates for responsible economic policies through its project, the Colorado Fiscal Policy Institute.

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