In addition to the tax increases and broad federal spending cuts (known as “sequestration”) scheduled to take effect at the end of this year, the emergency unemployment benefits system is also expected to come to an end.
It doesn’t get as much attention as the defense cuts or the tax increases, but the end of these extended unemployment benefits is expected to affect millions of Americans. More than two million workers now collecting federal unemployment benefits will lose the lifeline after the week ending Dec. 29. By the end of the first quarter of 2013, another one million will run out of state benefits without ever benefiting from Emergency Unemployment Compensation, according to the National Employment Law Project, a liberal advocacy group.
There seems to be a widely held view — at least judging from the e-mail I get on the day of each month’s unemployment report — that idle workers don’t have jobs because they’ve gotten used to being paid not to work and would prefer to continue collecting unemployment rather than go out and earn an honest living. But given that so many unemployed workers will have exhausted their benefits or were never eligible for benefits in the first place, more than two out of every three unemployed workers will enter 2013 without receiving any form of unemployment insurance (for example, those whose benefits lapsed or who didn’t qualify, because of self-employment or insufficient hours).
These extended unemployment benefits serve as a powerful stimulus measure, economists say, because the money dispensed in the form of jobless benefits gets spent very quickly and so moves through the economy quickly (compared with, say, tax cuts for wealthier Americans, who are likely to save at least some of the money they pocket)…
Choosen excerpts by Job Market Monitor from