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Economic Currents

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Bah Humbug for Unemployed Workers

Posted December 2, 2011 | Categories: Hawaii's Economy, Hawaii's People, Blog

If job seekers are disappointed this Christmas, the New Year may be even less bright unless Congress acts soon. The extended federal unemployment insurance benefits are set to expire in early January 2012. Barring Congressional action, most recently laid off workers will not be able to take advantage of the extended benefits.

Currently, the federal unemployment insurance extensions allow a qualified jobless individual to continue collecting unemployment benefits after she exhausts all regular state unemployment insurance. In essence, the extended benefits provide support for people who were hit hardest by the economic recession -- the long-term unemployed. Normally a jobless individual in Hawaii is eligible for up to 26 weeks of state unemployment insurance benefits. However, as long as jobless workers continue to file claims and meet requirements to search for and accept suitable work, they can apply for the federally funded Emergency Unemployment Compensation (EUC) program. The EUC has several Tiers and once a jobless individual exhausts benefits from a particular Tier he can move on to the next one:
--EUC Tier I: up to an additional 20 weeks of benefits
--EUC Tier II: up to an additional 14 weeks of benefits
--EUC Tier III: up to an additional (and final) 13 weeks of benefits.

Under the current EUC program qualified unemployed Hawaii residents are eligible to receive unemployment benefits for a maximum of 73 weeks (some states provide up to 99 weeks).

With the EUC program set to expire, some unemployed will face a termination of their federal extended benefits before having an opportunity to go through all of the EUC Tiers. Hence they will not receive a full allotment of benefits for which they otherwise would have been eligible if the provisions remained in place. In fact, most individuals who were laid off in July 2011 or later will not be eligible for extensions (unless they manage to file the initial EUC claim before December 31, 2011). Those who are already on the EUC (i.e., people laid off prior to July 2011) will be able move to the next Tier only if they exhaust benefits in their present Tier by January 3, 2012.

How many people in Hawaii will be affected by the termination of the EUC program? The question is not easy to answer. The Hawaii Department of Labor and Industrial Relations (DLIR) posts weekly counts of regular claims only, excluding the EUC claims.  There is no data available on the duration of unemployment for EUC claimants (however, data does exist on duration of unemployment for the regular claims). This means that there is no definitive way to estimate the number of people who will lose benefits as a result of the EUC expiration. A study by the National Employment Law Project (NELP) estimates that as many as 3,000 unemployed will be affected in Hawaii by the termination of the federally funded extended benefit program. Of these, 1,400 will have no access to the federal extensions; the remaining 1,600 unemployed are currently receiving EUC benefits, but will not be able to move to the next EUC Tier.

 

These estimates strike us as a little on the low side. According to DLIR, there are approximately 9,000 claims for EUC benefits each week.  Initial claims for regular benefits have averaged just under 2,000 each week since June, and despite a decline in initial claims over the past few months, Hawaii's unemployment rate has crept back up to 6.2% in the third quarter of this year.

Long-term unemployment has been a particularly damaging feature of the recent recession and sluggish recovery. Providing a financial safety net for these workers both supports families individually and supports overall spending and economic growth. If we are lucky Congress will find a way to come to an agreement that saves the extended benefit program until the economy is on a firmer footing.

-- Inna Cintina

 

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