Jobless Aid Splits Parties, Experts; Budget Agreement Excludes Extension of Jobless Benefits, But Parties Keep Debating Program's Impact
Lawmakers left an extension of jobless benefits out of their budget agreement, fueling the debate over what happens to unemployed workers--and the economy--when the program expires.</br></br>Many Democrats are upset that the extension wasn't included in the deal, and the White House estimates that roughly 1.3 million workers will stop receiving unemployment payments, which average $300 a week, when the program expires on Dec. 28. Republicans say the extended benefits have gone on long enough--more than five years--and argue that the checks create a disincentive for people to find work.</br></br>Many economists believe such aid boosts the unemployment rate, perhaps by as much as 1 percentage point. But they differ on the reasons and on the size of the effect. Some of the unemployed might drop out of the labor force altogether without the aid; others might be spurred to search harder for a job.</br></br>Now the debate is about whether current economic circumstances warrant a longer extension. Democrats argue that they do and that the current labor market is too weak to allow benefits to expire. About 4.1 million workers in the U.S. have been jobless for at least six months. That is down from a peak of 6.7 million in April 2010, but still triple the pre-recession level.</br></br>"Although [long-term unemployment] has come down, it is still at an unusually high level by historical standards," said Rob Valletta, economist at the Federal Reserve Bank of San Francisco. "That raises concern about the status of the long-term unemployed and policies that might be designed to support them."