Unemployment benefits in jeopardy [The Morning Call, Allentown, Pa.]

Dec. 11--Long-term unemployment benefits have allowed John Hillman to search long and hard for work without fundamentally altering his lifestyle.

The 60-year-old Wescosville man lost his job as a life insurance underwriter in July 2010. Although he has had to cut back on leisure travel and Christmas gifts, he has managed to put food on the table and pay his bills all the while. The author of four fantasy novels and numerous plays and short stories, he continues to write in his spare time.

Now, however, Hillman is bracing for an abrupt end to the roughly $1,000 in government checks he receives every month -- a possibility that grows nearer every day that Congress remains deadlocked over the future of federal unemployment insurance.

"I'll have to get a job," he said, adding after more thought, "It will probably mean two jobs."

He'll need two jobs because he'd have to accept lower wages in a new line of work outside of his narrow field of expertise. "I'll have to start over," Hillman concluded.

Assistance for the long-term unemployed -- those out of work for more than six months -- is emerging as a defining issue heading into the presidential election year. Democrats tend to frame unemployment benefits as a basic element of the nation's safety net, and one that doubles as a powerful economic stimulus. But more and more Republicans see such entitlements as a costly disincentive to work.

The two sides disagree over not only how long future benefits should last, but also how to pay for them: Democrats want to fund an extension through a tax increase on people earning more than $1 million a year. Republicans say any expense should be offset by cuts to other government programs, including a pay freeze for federal workers.

Though the outlines of the debate are familiar, the stakes are unusually high: Never before has the federal government cut off unemployment insurance with so many people out of work for so long.

The closest the government has ever gotten to taking such dramatic action was in 1985, when the nation's unemployment rate was 7.2 percent, according to National Employment Law Project. In November, the unemployment rate was 8.6 percent, after being stuck for most of the year around 9 percent.

Not counting those who have quit looking for work, the country had 13 million unemployed workers last month. The average duration of their unemployment was an all-time high of nearly 51 weeks.

Normally, unemployment insurance is a state responsibility, and the unemployed are eligible to receive it for a maximum of 26 weeks. The federal government, however, usually provides extended coverage during an economic downturn.

As the economy slid into recession in 2008, President Bush signed into law legislation authorizing Emergency Unemployment Compensation, or EUC, which provides 34 to 53 weeks of benefits, depending on the severity of a state's unemployment rate. An additional 13 to 20 weeks are available through a separate, permanent federal program called Extended Benefits.

All told, some of the unemployed may receive assistance for up to 99 weeks.

Since its initial passage, EUC has been reauthorized nine times. But the issue has become increasingly contentious since the 2010 mid-term election when Republicans who campaigned on the promise of fiscal restraint gained control of the House of Representatives.

This year, Democrats had hoped reauthorization would be part of any budget agreement with Republicans. But the matter is back before Congress after the collapse first of debt-ceiling negotiations between President Obama and House speaker John Boehner, R-Ohio, and then of the so-called Super Committee, which was empowered to create a binding plan to reduce the budget deficit.

Hanging in the balance are the benefits of 1.8 million Americans out of work for more than 26 weeks. That includes 280,000 Pennsylvanians and 14,000 Lehigh and Northampton residents, according to the state Department of Labor and Industry.

Without EUC reauthorization by the end of the year, some Pennsylvanians will lose their benefits immediately, according to the labor department, which administers federal unemployment insurance. Others will lose theirs in the coming weeks or months under the government's multi-tiered system.

That system offers assistance primarily through three tiers: the first lasting 20 weeks and the second and third each lasting 13 weeks. People would receive checks for the remaining weeks in their tier but would not be allowed to advance into the next tier.

Assistance for those who have already exhausted their EUC benefits but are receiving federal Extended Benefits would end on Dec. 31.

Paying the bills

Daniel Raub of Allentown, who lost his job doing accounting and clerical work for Dun & Bradstreet in January 2010, said the loss of government support would force him to dip into his retirement savings.

"That's the last resort, but it's something I'd have to rely on just to pay the bills," said Raub, 58. "And once that's gone, I don't know what would happen."

Relocating for work is not a realistic option, he said, because he needs to be close to his ailing mother. Additionally, it would require him to sell his house in a down market, only adding to the financial strain.

Meanwhile, a bad back means certain kinds of physical labor, such as distribution center work, are out of the question.

"I've been applying for anything I can reasonable do," Raub said. "I've had several interviews lately ... but at the last moment they fell through."

Long-term unemployment benefits have cost the federal government $434 billion over the past four years, according to a CNNMoney analysis of federal records. But Republicans opposed to EUC reauthorization are concerned about more than money.

According to a report by the Heritage Foundation, a Washington, D.C., think tank that promotes free enterprise and limited government, unemployment benefits "reduce the pressure to make difficult choices -- such as moving or switching industries -- to begin a new job," ultimately resulting in a higher unemployment rate.

U.S. Rep. Charlie Dent, a four-term Republican from Allentown who has consistently voted in favor of EUC reauthorization, said he is ready for a new approach.

"I don't think it was anyone's intent to continue 99 weeks of unemployment benefits indefinitely," he said.

As director of the Lehigh Valley Workforce Investment Board, Nancy Dischinat is charged with helping the region's unemployed find work. She said sometimes her clients become frustrated after failing to find openings in their chosen professions or work that pay as well as their old jobs.

Someone "with a master's degree isn't necessarily interested in becoming a welder," she said. "There is a mismatch between what they were doing and what's available."

Yet, she acknowledged, unemployment benefits are supposed to provide short-term help.

"Ninety-nine weeks becomes a lifestyle. So what's the balance? How do we help people?" she said. "Because we don't want them out on the street."

Unemployment's ripple

Legislation unveiled Thursday by the House Republican leadership would gradually reduce the duration of federal unemployment insurance to 56 weeks.

"I understand there are people out there struggling," Dent said. "We're really trying to make the program better and more effective for those who are out of work. We want to get them back to work."

On the other side of the aisle are Democrats who say continued long-term assistance for the unemployed makes sense economically and morally.

"Extending unemployment insurance is a win-win for Pennsylvania," Sen. Bob Casey, D-Pa., said in an email. "It will help hard-working Pennsylvanians as they look for work in this tough economy and act as an economic boost to our small businesses who benefit when these dollars flow into the economy."

Technically, the Great Recession ended more than two years ago; economists narrowly define a recession as a decline in economic output. Nonetheless, hiring since then has failed to make up for extensive job losses, let alone accommodate population growth.

The effects of widespread joblessness have rippled throughout the Lehigh Valley. First-time use of area food banks has soared, a survey by Second Harvest Food Bank found. So has eligibility for free lunch at public schools, according to state Department of Education data.

Lehigh Valley Hospital-Muhlenberg has added the equivalent of 15 extra employees to staff an expanded emergency unit that opened last month partly in response to a spike in emergency room visits. (Joblessness drives up ER use because most health insurance is provided by employers.)

Yet, long-term unemployment benefits have prevented a bad situation from becoming worse, according to the National Employment Law Project. Without such assistance, 3.2 million people, including nearly 1 million children, would have slipped below the poverty line in 2010, the law project, an advocacy group in New York for the unemployed, reported in October.

Most economists agree that unemployment benefits create a powerful short-term stimulus because recipients usually cash and spend government checks immediately to cover basic needs. According to the law project, federal unemployment insurance created or saved 1.1 million jobs annually during peak reliance in 2009.

While an end to long-term unemployment benefits would not be catastrophic for the Lehigh Valley, the impact would be felt throughout the region's economy, Bethlehem economist Kamran Afshar said.

"They're using that money to buy food, pay rent," he said of those collecting unemployment checks. "If that money goes away ... it's a very negative thing. There are no two ways about it."

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610-820-6130

In danger of losing benefits

1.8 million Americans

280,000 Pennsylvanians

14,000 Lehigh and Northampton residents

Sources: National Employment Law Project and the Pennsylvania Department of Labor and Industry

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