When the unexpected occurs and people are left
without work, the result can be economically harmful to both the
individual and the economy as a whole, leading to loss and suffering on
the personal level and distortions and volatility on the communal level.
For this reason, many governments – including the federal government of
the United States – step in and provide unemployment benefits to help
people pay living expenses while they try to transition to a new job. In
the wake of the Great Recession that began in 2008, many people in the
United States lost their jobs and had trouble finding new ones. As a
result, the federal government moved to extend unemployment benefits.
This extension of benefits came with a number of limitations. Read on to
learn more about federal extended unemployment benefits.
Unemployment Benefit Program Structure
Unemployment benefits in the United States are funded by employment
taxes. Taxes and benefits both come through a mixed federal-state
structure, with benefits and tax rates differing from state to state.
Naturally, neither federal nor state government officials want people to
be living off unemployment benefits indefinitely, so there are
limitations.
- First, to qualify for unemployment benefits in a particular state, a
worker must show that he or she held the job that was lost for a
minimum amount of time – set by the state – and can only collect
benefits for up to 79 weeks. (Due to limited resources, however, this
limit has been diminished to as few as 63 weeks in some states.)
- Second, recipients of these benefits must also continue to meet
certain requirements throughout the duration of the program, such as
verifying that they are, in fact, looking for employment.
In some instances, economic circumstances may cause government
officials to seek an extension to the program benefits. For this reason,
unemployed people can sometimes collect unemployment benefits for
another 20 weeks – 99 weeks in total.
Funding Structure
While the federal government provides the bulk of the benefits in
these programs, it does not directly oversee the management of these
programs. Rather, it funds the programs that the states manage,
requiring the states to stay within certain guidelines. Particularly
stringent guidelines apply to states that receive the extra 20 weeks of
extended unemployment benefits. For instance, according to one CNN Money
article, to receive the extension from the federal government, a state
must prove that its statewide unemployment level is “at least 10% higher
than it was in at least one of the past three years.”
Qualifying For Extension
The specific qualifications for unemployment extension benefits vary
from state to state. Someone who would qualify in one state may not
qualify in another state, depending on that specific state’s
requirements and the state’s own eligibility for extended unemployment
benefits. However, the main requirement that is common across all states
is that unemployed people must be actively seeking employment in order
to continue receiving unemployment benefits.
Philosophy
The philosophy driving unemployment benefits – and extended
unemployment benefits – is the Keynesian concept of automatic
stabilization. Much of the focus of Keynesian economics lies in the
limiting of volatile economic fluctuations. When a large number of
people suddenly lose their jobs, the buying power they once had in the
economy disappears, resulting in a drop in consumption that harms
businesses and can trigger even more unemployment. By giving people
unemployment benefits in this way, governments help to ameliorate the
economic shock that unemployment causes – not just for the unemployed
individual, but for the economy as a whole. Extensions to benefits are
offered in extreme economic situations because it is feared that such
extreme situations can lead to economic chain reactions that will cause
problems for many years in the future.
Criticism
Criticism is common for unemployment benefit programs in general –
and for unemployment benefit extensions in particular. One of the issues
often cited is that, contrary to what some may believe, the taxes that
fund unemployment benefits directly result in lower wages for working
people while they do have jobs. Perhaps more importantly, though, is the
criticism that offering unemployment benefits for an extended amount of
time gives people incentive to remain unemployed and not look for work.
It also removes much of the guilt associated with firing employees,
causing employers to be more willing to do so. Critics say that extended
unemployment benefits, rather than helping the nation’s unemployment
situation, actually burden the economy so much that it is even more
difficult to recover from recessions.
The Current Situation
As of 2012, the situation currently faced in the United States is one
in which many of the people previously receiving unemployment benefits
as a result of losing their jobs to the Great Recession have now been
“rolled off” from the program. As for extended benefits, no states
currently qualify for those. According to a New York Times article,
unemployment benefit extensions for the last few qualifying states ended
in May of 2012. Now, unemployment benefits are once again limited to
the normal terms.
