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Jump in the Long-term Unemployed Underscores Need to Restore Federal Benefits

11:42 am in Uncategorized by WI Budget Project

Unemployment of Six Months or More Climbs by 203,000 in February

The US Capitol dome at dusk.

New figures show why Congress MUST restore long-term unemployment benefits.

The new employment numbers released Friday provide further evidence of the need to restore the federal Emergency Unemployment Compensation (EUC) program for the long-term unemployed. Although there was a little bit of positive news relating to total employment levels, the new data illustrate that the modest job growth has not eased the crisis facing the long-term unemployed. For example:

  • the total number of jobless workers who have been unemployed for at least six months grew significantly in February, climbing by 203,000 to 3.8 million people;
  • the unemployment rate ticked up to 6.7%; and
  • the labor force participation rate is one-half a percentage point below where it was one year ago.

Federal unemployment benefits for people who have been unemployed more than six months were cut off at the end of December. One argument made by the supporters of that decision is that eliminating the EUC program would reduce the jobless rate by giving the unemployed increased incentive to find work. That argument ignores the fact that UI benefits are a poor substitute for the income from employment, and the latest increase in long-term unemployment underscores the point that federal UI benefit argument weren’t holding back jobless workers.

In Wisconsin there are now almost 40,000 workers who have lost their federal EUC benefits since the end of December. If GOP members of Congress continue to block renewal of the Emergency Unemployment Compensation (EUC) program, each week an additional 72,000 unemployed workers across the U.S. who run out of unemployment benefits will be left without jobless aid, including about 1,600 more each week in Wisconsin.

The National Employment Law Project (NELP) has been collecting stories from affected individuals and families. Among the recent stories of hardship is this one from Wisconsin:

Melvin Hildreth III, 54, from Franklin, Wisconsin, lost his job last year and his benefits when federal jobless aid expired in December. He has been applying for 100 jobs a week. “This is a sad, hard time,” he wrote to the National Employment Law Project this week. “I have always worked and was very successful. I have sold everything I own. I had to move to Arizona to live with my 73-year-old father.”

A bill filed by Senator Jack Reed (D-RI) on Tuesday to reauthorize the EUC program for six months might be voted on as early as this week. His proposal is fully paid for with funds saved from the Farm Bill. The last effort to bring a reauthorization bill to a vote in Senate fell one vote short of the 60 needed to overcome a Republican filibuster.

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Wisconsin Children Harmed by Failure to Renew Federal Unemployment Benefits

2:13 pm in Uncategorized by WI Budget Project

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Children in Wisconsin use a swingset

Long term unemployment cuts could have dire effects on children.

Congress has failed to extend federal emergency jobless benefits, harming jobless workers, businesses, and local economies in Wisconsin. The abrupt end of these benefits also harms many Wisconsin children with parents who have been out of work a long time.

Extended benefits under the federal Emergency Unemployment Compensation program ended abruptly at the end of December, reducing the maximum number of weeks of unemployment benefits in Wisconsin from 54 weeks to 26 weeks. Discussions about extending benefits are underway in the Senate, although it is unclear whether lawmakers can agree on whether the cost of re-authorizing extended benefits needs to be offset by cuts in other programs. Senate Republicans have also indicated they are interested in tying an extension of emergency benefits to priorities such as building the Keystone XL oil pipeline and opening energy exploration on federal land.

Children of parents who have been out of work a long time are among the people hurt by the inability of Congress to come to an agreement. In 2013, nearly 44,000 Wisconsin children had a parent who had been searching for a job for 26 weeks or longer – a number that has tripled since 2007. With the end of federal unemployment benefits, the parents of these children no longer have access to extended jobless assistance.

Growing up in a household affected by unemployment can have long-term negative impact on the wellbeing of Wisconsin children. The longer the period of unemployment, the more severe the effects are likely to be. According to the Urban Institute, potential effects for children include:

  • Lower math scores;
  • Poorer school performance;
  • Higher risk of grade repetition;
  • Lower rate of college attendance; and
  • Lower earnings as an adult.

The sharp increase in the number of Wisconsin children affected by long-term in unemployment shows the need for Congress to extend federal unemployment benefits. Not every long-term unemployed parent receives unemployment benefits, but for those who do, federal unemployment benefits are a lifeline. Congress should re-authorize federal unemployment benefits before their loss does further harm to Wisconsin’s children.

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Wisconsin Budget Compounds the Economic Challenges for Low-Wage Workers

11:46 am in Uncategorized by WI Budget Project

The underside of the Wisconsin Capitol Dome

How Wisconsin’s budget cuts hurt workers.

Workers in Wisconsin and across the U.S. must still cope with a relatively weak labor market.  That is especially challenging for low-wage workers who are struggling with the declining value of the minimum wage, reductions in employer benefits like health care, and growing inequality. Those challenges are exacerbated in Wisconsin by budget decisions made by state lawmakers.

A new Wisconsin Budget Project issue brief examines how the how state budget choices are affecting low-wage workers in Wisconsin.  It focuses primarily on the effects of the new budget bill, but also examines a few instances of how that bill continues or compounds the challenges for low-wage workers caused by the 2011-13 budget.

Some of the major effects include the following policy choices relating to health insurance, child care, taxes and unemployment insurance:

Making health insurance and care much more expensive for many parents now in BadgerCare

The 2013-15 budget bill cuts in half the income eligibility ceiling for adults participating in BadgerCare – reducing that cap from 200% of the federal poverty level to just 100%.  That change is expected to cause nearly 90,000 low-income parents and about 5,000 childless adults to lose their BadgerCare coverage, beginning in 2014.  The good news is that Wisconsin is extending coverage to about 80,000 childless adults below the poverty level, but the decision to cap eligibility at that level and turn down enhanced federal funding from the health care reform law means that a single individual with a minimum wage job is ineligible for BadgerCare if he or she is working 30 or more hours per week.

The issue brief analyzes the effect of the budget for a single mother who has two children and an income of $11 per hour (and currently has now BadgerCare premiums and minimal copays).  Beginning in January, when she loses her BadgerCare coverage, she will have to buy insurance through the new Marketplace and will have to pay premiums of about $460 per year and will have significant co-pays and deductibles, which could be as much as $2,250 per year.

Charging premiums for parents in Transitional Medicaid

The state is now seeking a federal waiver that would not only restrict eligibility for BadgerCare, as described above, but would also change another form of Medicaid, known as Transitional Medical Assistance (TMA) by initiating premiums for parents between 100% and 133% of the federal poverty level. If that waiver is approved, parents who climb above the poverty level would struggle to be able to regularly pay the premiums and many are likely to lose their insurance coverage.

Additional cuts in child care subsidies – adversely affecting accessibility and affordability of care

The budget cuts an additional $31 million over the next two years from the Wisconsin Shares child care subsidy program for low-income working families (on top of large cuts in prior years).  Although that cut reflects the estimated cost of maintaining the status quo, it is likely to adversely affect many low-wage workers by causing more child care providers to drop out of the subsidy program and by indirectly increasing co-pays for parents participating in Wisconsin Shares.

Continuing last session’s tax increases for low-income households                                                         

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Unemployment Benefits End for Long-Time Unemployed: What’s at Stake for Wisconsin in the Fiscal Cliff

10:46 am in Uncategorized by WI Budget Project

The 'fiscal cliff' will hurt many in Wisconsin and the USA by ending their unemployment benefits.

At the end of the year federal unemployment benefits come to an abrupt end, ending all unemployment benefits beyond the 26 weeks of benefits provided by the state. This change, which is part of the fiscal cliff, will make it harder for jobless workers in Wisconsin to make ends meet and could slow the Wisconsin economy.

Right now, jobless workers in Wisconsin have access to 37 weeks of federal unemployment benefits. About 44,000 Wisconsin workers who haven’t been able to find a job currently receive federal unemployment benefits, pumping $42 million a month into the Wisconsin economy. Those out-of-work workers will see their benefits suddenly terminated.

Nationally, more than two million jobless workers could lose their federal unemployment benefits at the end of the month.   In addition, nearly one million people who would otherwise become eligible during the first three months of 2013 may not be able to receive any EUC benefits if this lifeline for the long-term unemployed is not extended.  The failure to extend it would remove close to $30 billion of income from the pockets of jobless workers next year, which would be a huge hit for local communities and the national economy.

This is a bad time to end federal unemployment benefits. Wisconsin’s unemployment rate has been slow to drop – in October 2012, Wisconsin’s unemployment rate was 6.9%, the same that it was nine months earlier in January 2012. To get back to pre-recession levels of employment, Wisconsin needs to add nearly 250,000 new jobs, according to the Center on Wisconsin Strategy. Wisconsin isn’t making meaningful progress towards that goal – in fact by some measures, Wisconsin’s job growth has been among the slowest in the country.

There simply aren’t enough jobs in Wisconsin for everyone who is seeking work. Congress should wait until the economy is on a sounder footing to let federal unemployment benefit expire.

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Photo by DonkeyHotey released under a Creative Commons license.