End of Unemployment Benefits Extension

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Federal Emergency Unemployment Compensation benefits started to help people during the recession, ended recently, impacting 12,100 Arizona families. The Grand Canyon Institute, a private non-profit corporation that provides non-partisan research, has analyzed the economic impact of the loss of extended federal unemployment benefits. David Wells, research director for the institute, will talk about the impact.

Ted Simons: Federal emergency compensation was instituted to help those who have lost their jobs during the recession, but those benefits have now been terminated, and impacting thousands of Arizona families. David Wells is the research director of the Grand Canyon Institute, a private nonprofit corporation that provides nonpartisan research, he analyzed the impact of losing the extended jobless benefits. Thanks for joining us. Good to have you here.

David Wells: Thanks.

Ted Simons: What is emergency employment compensation?

David Wells: The state provides 26 weeks of unemployment, and you only get unemployment compensation if you have lost your job to, through no fault of your own, and after 26 weeks, you are cut off, and what happens during, you know, major unemployment crisis, is the Federal Government comes in and extends the benefits. They were extended as much as a total of 99 weeks, and right now, there was a 37 additional weeks, so 66 total that Arizona people could get until December .

Ted Simons: And again, this is averaging a couple hundred to something along those?

David Wells: The average benefit, Arizona has low benefits and it's 220 a week, is the average weekly benefit. 240 is the maximum that anyone can get.

Ted Simons: And who qualifies and who does not qualify?

David Wells: Yeah, you have to have lost a job through no fault of your own. You cannot just quit, and that's -- and then you are able to get the benefits.

Ted Simons: And why did these benefits terminate?

David Wells: Well, Congress only authorized them through December 28th, and then they had not reauthorized them before they went into recess.

Ted Simons: And that reason being?

David Wells: Well, I mean, I think generally, they had a budget agreement that they came up with, and I think -- the Democrats want this had as part of the agreement. The Republicans want it paid for. They don't want to provide any benefit without some kind of budgetary pay-for. And they did not have much time to get something done before the holidays. So that, unfortunately, it terminated.

Ted Simons: I think it was an ideological aspect, and some folks look at benefits as being discouraging to those looking for work.

David Wells: Right. And but the economic research shows that, that the very small impact. There is a small portion of people who will be on, on unemployment longer, and what it helps a lot of people do is stay in the labor force, it keeps them going. Otherwise, before they give up.

Ted Simons: Talk to us -- a curious impact on the jobless rate here, isn't it?

David Wells: Well, it's more than curious, it's tragic. One of the things that I discovered here was that, that we have lost 150,000 people since 2008 from our labor force and, and it's 130,000 people since January when unemployment rate was 10.8 percent. That means the people have given up looking for work for the most part.

Ted Simons: And I guess I use the word "curious" because all of a sudden the jobless rate goes down but that means a lot of people have left.

David Wells: It's a bad way.

Ted Simons: The impact on Arizona, the lost benefit, what did you find?

David Wells: Well, the impact is going to impact about 12,1000 families immediately. And over the course of 2014, we expect about 22,000 families to be impacted in the first half of the year, and if it's not extended another 20,000 will be impacted at the second part. And the total economic cost of that will be about $174 million, which could cause 1,600 people to lose their jobs.

Ted Simons: So, you are saying because these folks don't have the money in the system, folks who could use the money in the system, by way of those folks, they could lose their jobs?

David Wells: Yeah. If they don't have money to spend -- they will probably, you know, take out a second mortgage or sell a car. They will do a lot of desperate things. But, that's really going to hurt them in the long run, and if they don't spend the money, other jobs are not supported.

Ted Simons: I noticed the reports had recommendations in here, one of those being phase out the benefits as opposed to ending them at once. Talk to us about that.

David Wells: Congress has started to do that, and I said at one time you could get 99 weeks of unemployment benefit, and you cannot do that anymore. And the idea is, as the economy is recovering, states have to qualify for added benefits, and our current rate is just below 8 percent, and if we stay below that, maybe we should not get 37 extra weeks but maybe 28 extra weeks of benefits. The idea is as the economy improves, we don't need these benefits, and in states are below 6 perceny unemployment, and they probably don't need extra added benefits.

Ted Simons: And the approving of job training and job placement was also mentioned.

David Wells: I think that, we're losing out on a lot of economic growth in Arizona, so it's not only a tragedy for the families but a tragedy for the state because we're not getting the economic growth. So, we have got to identify two things that the state legislature could do, and one of them had to do with, with -- with helping with job training and so forth because, you have got a lot of people who, who are going to have a hard time getting back into the labor force or are psychologically beaten down, and they really need career coaching or some kind of, of placement services and there is ways the state can be entrepreneurial by a grant. We are expecting you to perform but we need you to work with these folks and provide some subsidies for you and get them back in the labor market.

Ted Simons: You mentioned a focus on women maintaining families.

David Wells: One of the stunning things we found was in 2012, the unemployment rate for women who maintained families was 12.7 percent. So, while the overall rate is going down, their rates are going way up. And the reason that I think that, is part of it, the state has cut the subsidies for, for low income working families, childcare. They removed $80 million from the budget during the budget crisis, and they have not put it back in. The consequence for that has meant that 10,000 less families are being served. They only had Federal funds to pay for the program. And these are women who, obviously, need affordable childcare.

Ted Simons: There is some who want to see, they say this is fine and dandy but I need to see some linkage with something else. Should job training be linked to benefits? Is that something that could be considered?

David Wells: It could be considered. Some people really need different things. Every worker is different with what they need. And as I say, that's why I think that this kind of competitive system where they provide grants, you could buy, provide different things to different folks, different industries have different needs, there is good matches, and in other cases, what the research has found is that, is that when somebody is unemployed for more than six months, they get discriminated against in the labor market, and the things that sort of vet out applications. When they see that, regardless of your qualifications, you could be the best person in the world, you are getting thrown out because you've been unemployed for six months, so getting those people placed temporarily where an employer can try them out, can be helpful, and there is a lot of needs out there. But we need to do something about it. We can't expect people who have gone through the rigors of unemployment because it's really hard on people to expect them to always bounce back.

Ted Simons: Ok. And real quickly, as far as public policy issues are concerned, what do we take from this?

David Wells: Well, I would hope that Congress is going to make this an urgent priority. We saw it yesterday pass a procedural hurdle in the Senate, and they have got to work together because even if they do this retroactively in Congress, these people need the money now. And it's really important. And at the state level, jobs are -- it's a critical thing. We passed a jobs bill in 2011, but not one that focused on the people unemployed.

Ted Simons: All right. We have got to stop you right there. Thanks for joining us.

David Wells: Thank you very much.

Ted Simons: And that is it for now. I'm Ted Simons. Thank you very much for joining us. You have a great evening.

David Wells:Research Director, The Grand Canyon Institute;

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