By Ryan Wynne
Hundreds of thousands of Washington residents will almost certainly spend less on the holidays this year. That’s because emergency unemployment benefits are being phased out and it’s unclear whether federal lawmakers will extend them again.
Those getting emergency benefits will continue to receive them until they expire, said Sheryl Hutchison, communications director for the Washington State Employment Security Department. But the cut means the total amount of time new claimants can draw unemployment benefits will go from a maximum of 99 weeks down to 46 weeks.
And that won’t just affect the unemployed and their families. Without benefits, the unemployed will probably cut back on their spending, which could hinder economic growth.
Since, July 2008, Washington’s unemployed have collected more than $3 billion in federal unemployment benefits alone. And unemployment benefits pumped $8.4 million into the Bellingham-area economy this October, $5.2 million of which came from federally funded emergency unemployment compensation, extended benefits, and federal additional compensation, according Reinhold Groepler, regional economist with the Employment Security Department.
“Obviously there’s not going to be that amount of cash going into the economy,” Groepler said. “We will have less money coming into the economy from external sources as this thing phases out.”
Because emergency benefits are being phased out, people who collected regular unemployment benefits at the end of November and people who filed new claims after Nov. 27 are limited to 46 weeks of benefits.
The department has already begun notifying the 238,000 people across the state who could be affected by the elimination.
“We know that the people who depend on these benefits will be very concerned about the loss of emergency unemployment benefits,” Nan Thomas, assistant commissioner for the unemployment insurance program, said in a press release. “We are adding staff who will be available solely to answer questions about these claims.”
In October, 101,948 people statewide received emergency unemployment benefits. During that same time in the greater Bellingham area, 2,524 people received emergency benefits, said Jeff Robinson, unemployment insurance research manager.
For the past year, eligible jobless workers have been able to to receive up to three types of unemployment benefits. First they can get up to 26 weeks of regular benefits — this period is covered by the state’s Unemployment Insurance trust fund.
Next, they can — or at least they could — receive up to 53 weeks of emergency unemployment compensation (EUC). And after that, they can receive up to 20 weeks of extended benefits. Because of the recession, emergency and extended benefits were funded entirely by the federal government, but that recently changed.
That’s because the federal government also stopped paying 100 percent of extended benefit costs Nov. 30. The federal government doesn’t normally pay all of state extended benefits, but did so as part of the Federal Recovery Act.
The state will split the cost of extended benefits with the federal government until spring of 2011. At that point, barring congressional action, Washington will likely cancel those benefits. That will reduce the amount of time people can receive benefits to a maximum 26 weeks.
On Dec. 6, President Obama reached an agreement with GOP lawmakers that could extend emergency unemployment benefits — that deal has a price tag of $56 billion.
And if the deal passes, “It means anybody eligible would be able to receive those benefits,” said Hutchison, from the state Employment Security Department.
The agreement would also extend Bush-era tax exemptions for the middle class. In return, tax exemptions for wealthy Americans would also be extended.
That last part has certain House Democrats riled up. They have rejected the deal and are trying to keep the tax package off the House floor, contending tax exemptions for the wealthy should not be included.
While federal lawmakers hash it out, some economists question whether extending benefits is good for the economy at all, citing a report by the U.S. Bureau of Labor Statistics that showed 3.4 million job openings in October.
That’s a lot of openings, but it’s still lower that the 4.4 million that were open when the recession began in December 2007, according to the report.
At this point, Hutchison and others at the Employment Security Department are waiting to see what federal lawmakers decide — and so are those receiving unemployment benefits.