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Help for the Jobless: A Final Test for the 111th Congress

by | November 11th, 2010 | 01:42 pm
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The American people have spoken. They are fed up with stalemate and inaction in Washington. The “old” Congress has an opportunity to prove that it hears the message, even before the “new” Congress is sworn in.

Fifteen million Americans remain unemployed and more than 40 percent of them have been unemployed for more than 6 months. Another 9 million people are working part time, either because of cutbacks among employers or because workers cannot find full-time jobs.

Yet unless Congress acts within the next few weeks, government assistance for the unemployed will be significantly reduced.

Since the onset of the Great Recession, the amount and duration of unemployment insurance (UI) payments have been extended beyond the standard 26 weeks. Workers in states with high unemployment have been receiving assistance for up to an additional 78 months. Furthermore, UI payments, which currently amount to a little more than $300 a week, were increased by $25 per week. Congress voted seven times over the last 2 years to renew these provisions, assisting more than 18 million workers.

The additional $25 per week payment already expired in the beginning of June. But now, if Congress does not act soon, UI payments will fall back to their standard 26 weeks, down from more than 100 weeks, for any worker losing his or her job after November 30, ironically, just days after Thanksgiving.

Additional steps taken by Congress in January 2009 to modernize the outdated UI system will also be rolled back at the stroke of midnight on New Year’s Eve, unless the outgoing Congress acts. These provisions extended payments to large groups of workers who previously were denied UI, including:

  • workers seeking part-time employment;
  • individuals who voluntarily leave their jobs for compelling family reasons, like domestic violence, illness or disability of an immediate family member; and
  • spouses relocating for a new job.

Other technical changes made it easier for unemployed workers to be eligible to receive UI.

Our nation’s UI program faces the real prospect of moving backward at the same time record levels of Americans are either unemployed or underemployed.

The story does not end there.

Legitimate anxiety over job loss caused by increased international competition has stifled the Obama administration’s efforts at negotiating and enacting market opening agreements with our trading partners. By contrast, other countries are aggressively pursuing such agreements, thereby potentially placing US companies and workers at a disadvantage.

Despite their differences on trade policy, Democrats and Republicans have worked together over the last 50 years in support of Trade Adjustment Assistance (TAA), which provides income maintenance, training, comprehensive job search, and technical assistance to those workers and firms adversely affected by increased international competition. Similar to the UI program, TAA has been periodically modernized to keep up with changing economic realities.

For example, TAA eligibility was initially limited to those workers who manufactured products that faced international competition, such as autos, clothing, and steel. Over the last decade, eligibility requirements were modernized in three important ways to include:

  • workers who produced inputs into final products that faced international competition, like car radios, windshields, and tires;
  • workers who lost their jobs because of offshore shifts in production; and
  • workers employed in the service sector who lost their jobs because of increased import competition or offshore shifts in production.

These reforms enabled 140,000 additional workers to be eligible for assistance.

Although conceived as an economic lifeline for those who depend on its assistance, TAA is still a relatively modest program, especially given the intensification of international competition and changes to the program over the last decade. Despite all the reforms, TAA’s annual budget remains less than $1 billion.

But unlike UI, where only the recent reforms expire, the entire TAA program is scheduled to terminate on New Year’s Eve.

The old Congress could take the easy way out by simply extending the UI provisions and the entire TAA program for a few months or even a year, thereby deferring to the newly elected Congress, with its “cut the deficit” mantra, for a decision on whether to make the changes permanent. The issue looms as a major test for the new Congress. For all the talk of cutting government expenditures, in fact there is no evidence that Americans are willing to forgo their own government assistance in order to reduce the deficit.

It would obviously be better for the outgoing Congress to act in the spirit of cooperation that has characterized the bipartisan support for UI and TAA over the years. Forcing Congress to act each year to renew TAA, or even cutting off the assistance altogether, needlessly heightens the anxiety associated with job loss associated with foreign outsourcing and increased competition from imports. US trade policy should not be run on a year-by-year basis; neither should TAA.

Trade lies ahead as a major initiative of the next Congress, and some in the Obama administration have begun suggesting possible cooperation on approving stalled trade accords. For example, the leadership of the new Republican House majority has signaled their interest in considering the Korea-US Free Trade Agreement, which is the focus of discussions between the two countries this week in Seoul. It would be ironic, and unfair, for Congress to consider that accord while allowing TAA and important provisions in the UI program to expire or hang by a slender thread year after year.

The current Congress may be in lame duck, but it can still come to the rescue of those continuing to face hardship in light of the recent economic downturn. Congress faces many important tests and challenges, but renewing unemployment assistance should be an easy one to pass.

Howard F. Rosen, resident visiting fellow at the Peterson Institute for International Economics, is executive director of the Trade Adjustment Assistance (TAA) Coalition, which supports aid for workers, firms, and communities adversely affected by increased imports and foreign outsourcing.

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