Deacon's Blog

From MichiganLive: Lapse of federal unemployment benefits costs U.S. economy $10 billion

Ten billion dollars. That’s how much money has not been spent in the U.S. economy since May because of the expiration of the federal unemployment benefit program, according to Lawrence H. Summers, director of the National Economic Council, writing on the White House blog.

That’s money that unemployed Americans who were receiving federal unemployment benefits would have spent on gas, groceries, utilities, rent and other basic necessities —” but didn’t.

Missed unemployment insurance payments since May total over $10 billion —“ enough to have created 100,000 jobs. An abrupt and premature withdrawal of relief is not only something families cannot afford, it is something that the economy cannot afford at a time when the economy is at a critical juncture.

In Michigan, reports Ed Brayton of the Michigan Messenger, it equaled $205.6 million in lost economic stimulus.

Aside from the economic hardship suffered by those who have lost benefits, the reduction in economic activity threatens the recovery, according to Summers.

Unemployment insurance puts money in the pockets of the families most likely to spend the money —“ which in turn expands the economy and creates jobs. The nonpartisan Congressional Budget Office has identified increased aid to the unemployed as one of the two most cost-effective policy options for increasing economic production and employment.

…and from the Rockford Register Star: Strain on aid agencies rises with jobless extensions stopped

ROCKFORD —” All Kim Adams-Bakke has to do to judge the effect of lapsed unemployment benefits is listen to the chatter in the Rock River Valley Food Pantry’s waiting room.

—œI hear a lot of people talking about them and what will happen if the extension doesn’t go through,— said the pantry’s executive director. —œWe know this is affecting us.—

It’s been 44 days since funding for 73 weeks of unemployment extensions lapsed, with efforts since to revive them ending in congressional stalemates. The benefits are in addition to the 26 weeks’ coverage offered by the states.

More than 100,000 Illinoisans have prematurely exhausted their benefits before being able to take advantage of the four tiers of extensions available.

Although a Senate vote on the funding is expected next week, it’s far from a sure thing that Democrats will garner the 60 votes they need to overcome a filibuster and pass the measure. The uncertainty has social service agencies like the food pantry preparing for the worst in the midst of an already challenging year.

—œWe don’t have food,— Adams-Bakke said. —œSome of the basics that you and I assume will be in our pantry, they’re not there for our clients. We need everything: cereal, canned food, proteins, everything. Our extras that we have are starting to dwindle.—

Keeping warm and dry

Housing is likely the first priority for individuals or families hit by the unexpected loss of unemployment benefits, and requests for help through the city of Rockford’s Community Services Department have soared this year. Director Jennifer Jaeger said inquiries into the department’s emergency housing programs, many of which cover Boone and Winnebago counties as well as the city, have been —œnonstop— this year.

—œWe have definitely seen a significant increase in phone calls from people whose unemployment benefits have run out,— she said. —œWe’re trying to schedule appointments for them as quickly as we can. Even before this most recent occurrence, we have been booked fairly solidly for six or eight weeks.—

Food on the table

Along with the food pantry, area demand for the federal food stamp program popped up again in June. More than 56,000 people in Boone and Winnebago counties were receiving funds from the Supplemental Nutrition Assistance Program. More than $8 million, or about $144 a person, was spent in June alone on the program.

Demand has been up across the state, said Tom Green, spokesman for the Illinois Department of Human Services. Through June, more than $1.3 billion has been spent on food stamps this year, compared with about $1.1 billion through June 2009.

—œI can only predict that July would be higher,— he said.

The temporary assistance for needy families program, or TANF, has also seen increased demand after years of decline. In Boone and Winnebago counties, 1,915 people were receiving the emergency cash supplement in June, up 56 percent from June 2009.

Eligibility for both programs is income-based, and being unemployed doesn’t automatically qualify an individual for either benefit. The assistance for the needy generally requires a much lower household income than food stamps, although determinations are made on a case-by-case basis.

Getting by, barely

The debate on Capitol Hill over unemployment benefits has centered largely on the cost, estimated to be $33 billion to fund the extensions through November. Democrats have so far resisted demands to offset the cost by cutting spending in other areas, calling the benefits emergency spending, while Republicans have so far objected to adding to the national deficit.

A secondary argument has been the effect of lengthy unemployment insurance extensions on job-hunting motivation, with some calling the benefits —” which average $325.53 a week before taxes in Illinois —” a disincentive to finding permanent work.

But Stillman Valley resident Teresa Hill, out of work since January 2009 after 20 years in construction, isn’t seeing many options. Hill got her last $410-a-week benefit five weeks ago and had been without income since.

She’s managed to get by with help from her family, but fears what’s to come.

—œI’ve pretty much just been borrowing money and hoping something comes through,— she said. —œI haven’t really seen any job offers opening up here.—

From the NY Times: Fears Grow as Millions Lose Jobless Benefits

CINCINNATI (Reuters) – Deborah Coleman lost her unemployment benefits in April, and now fears for millions of others if the Senate does not extend aid for the jobless.

“It’s too late for me now,” she said, fighting back tears at the Freestore Foodbank in the low-income Over-the-Rhine district near downtown Cincinnati. “But it will be terrible for the people who’ll lose their benefits if Congress does nothing.”

For nearly two years, Coleman says she has filed an average of 30 job applications a day, but remains jobless.

“People keep telling me there are jobs out there, but I haven’t been able to find them.”

Coleman, 58, a former manager at a telecommunications firm, said the only jobs she found were over the Ohio state line in Kentucky, but she cannot reach them because her car has been repossessed and there is no bus service to those areas.

After her $300 a week benefits ran out, Freestore Foodbank brokered emergency 90-day support in June for rent. Once that runs out, her future is uncertain.

“I’ve lost everything and I don’t know what will happen to me,” she said.

The recession — the worst U.S. downturn since the 1930s — has left some 8 million people like Coleman out of work.

Unemployment has remained stubbornly high at around 9.5 percent. According to the Bureau of Labor Statistics, in June 6.8 million people or 45.5 percent of the total are long-term unemployed, or jobless for 27 weeks or more…