COMMENTARY | The passage Friday of the payroll tax cut deal by Congress, as reported by CNN, will enable the average American to not only keep more of their earnings each paycheck but will also extend jobless benefits for the long-term unemployed.
However, before those who were afraid they were about to become 99ers get too excited, it must be pointed out that the deal only extended the current unemployment extension system for a few months. Afterward, long-term joblessness becomes defined, at least as far as the government is concerned, in a series of reductions in the number of weeks of eligibility as well as additional participation requirements.
With the possibility of several million jobless individuals still searching for employment -- and at least partially dependent upon unemployment extension benefits to make ends meet -- reaching the exhaustion limits on said benefits within the next few months, Congress reauthorized the current extension benefits through May.
According to a CNN breakdown of the legislation, maximum lengths of benefits eligibility begin to decrease in steps. On Sept. 1, the highest unemployment rated states decrease their entire length of benefits eligibility to 73 weeks, far shorter than the maximum in some states which allow for up to 99 weeks (therefore, the appellation "99ers" to those long-term unemployed individuals that have exhausted all their benefits, including extensions). Also on Sept. 1, states having average unemployment rates will see their maximum duration of benefits fall to 63 weeks.
Republicans made a surprise turnaround on their stance on the payroll tax cuts to eliminate the possibility that there would be a down-to-the-last-minute fight over the legislation. Congressional leaders decided to allow the tax cut to continue without finding some method of offset to its costs, which is estimated at around $100 billion.
Still, various cost-saving provisions were added to the unemployment extensions side of the legislation. New regulations will go into place for the unemployed to undergo drug testing in certain circumstances, a "reemployment assessment" if a recipient is long-term unemployed (27 and longer), and adhere to a first-ever set of "national job search requirements." Along with the decrease in overall time eligibility, the changes are designed to save the federal government hundreds of billions over time.
But what cost to the average working American? A facetious answer would be that the unemployment extensions will be paid for through broadband spectrum sales and having federal employees contribute more to their own pensions, but the truth of the matter is that shortening the periods of eligibility and making it tougher for the unemployed to meet requirements to receive benefits will undoubtedly see a rise in the overall number of long-term unemployed that have exhausted their benefits.
The number of 99ers -- regardless of the actual number of weeks the individuals received unemployment benefits -- will rise. Gradually at first, then in increasing numbers after September. This can be seen simply by noting, as does OpenCongress.org, that the number of long-term unemployed is still at record levels and that the average duration of joblessness stands at 40.1 weeks, two weeks higher than it was last year when the unemployment rate was nearly a full percentage point higher (per Bureau of Labor Statistics: 9.1 percent as opposed to the current rate of 8.3 percent).
And many of the 99ers, even as percentage points, are not counted in the official unemployment rate. In fact, many are believed to be missed in the extended unemployment tables, which places the overall unemployment rate (using "alternative measures of labor underutilization") at 9.9 percent in January, 1.6 percent higher than the national jobless rate. If those employed part-time looking for more gainful employment are considered, the rate rises to 15.1 percent.
But the accuracy of the count of 99ers and others, those currently jobless looking and not looking for work, is suspect at best when the number of teens, high school and college graduates, and others entering the work force for the first time are not counted. Given the sluggishness of jobs being added on a monthly basis, it is doubtful that this demographic is being accurately considered in the national unemployment rate.
Although a government survey conducted by the Congressional Research Service (using data from Oct. 2010) put the official number of 99ers at 1.5 million in 2010, the number is believed to be far higher. One estimate released by investment advisor Mike Shedlock in Sept. 2010, just a month prior to the government's figures, placed the number of 99ers at around 7 million.
And with the average worker going jobless for over 40 weeks, the numbers could get worse long before they begin to get better.
But with a struggling economy at odds with a spending cuts-driven Congress, coupled with different areas of the legislative process being controlled by opposing political parties, deals will be made. The question is: What is the true cost to families that lose their homes, vehicles, and/or can't pay their bills even though they've been trying to find work? Cutting off benefits might save the nation money on a fiscal and a national debt level, but when Great Depression-standard long-term unemployment exists, the true cost to actual people can be damaging on an extensive societal scale.
And it took two decades, a world war, and the rebuilding effort in Europe and Asia after World War II to push the American economy out of its torpid state.
As unfortunate as it may seem, large numbers of long-term unemployed individuals, 99ers and all, could become a permanent part of the post-Great Recession American way of life.
- unemployment benefits