After weeks of exhaustive and acrimonious wrangling over the so-called "fiscal cliff" budget negotiations, Congress last week finally arrived at an eleventh-hour compromise and passed a bill that included an extension of emergency unemployment insurance for the long-term unemployed. As a result, more than 2 million jobless Americans will not see a critical source of life-sustaining benefits come to a grinding and painful halt.
The extension of emergency unemployment insurance will be in effect through the end of 2013 and will simply extend benefits to the long-term unemployed who have exhausted their state benefits, as has been the case since shortly after the Great Recession began in 2007. Changes in long-term unemployment compensation will follow the new guidelines laid out in January 2012, when budget shortfalls caused Congress to reduce the maximum number of claim weeks allowable for residents in eligible high-unemployment states from 99 weeks to 73.
The long-awaited renewal of the emergency unemployment extension gives cause for a deep sigh of relief to job-seekers who continue to face an uphill battle in an economy and labor-market that continues to plod along with no appreciable increase in hiring. The just-released jobs numbers from the Bureau of Labor Statistics reveal that fact, with national unemployment remaining flat at 7.8 percent--the same figure as November after it was revised upward from 7.7 percent as initially reported.
As was reported Friday, 155,000 jobs were added nationwide in December--more than 20,000 fewer than the number necessary to move the jobless rate downward.
As most economists predict continued tepid growth in the job market and economy on the whole through 2013, the jobless-benefits extension is an economic godsend for struggling, out-of-work Americans. If emergency benefits had been allowed to elapse, it would have marked the first time in the history of the U.S. that long-term benefits were eliminated when the unemployment rate exceeds 7.2 percent, as it does now.
In addition to providing relief to the jobless, extending unemployment benefits makes great economic sense, as Nobel-prize-winning economist Paul Krugman states, because it is money that will be put directly back into the economy. For every dollar of unemployment compensation paid out, there is roughly $1.10 infused back into the economy. Simply put, that's stimulus we all can afford for now.