On Friday, November 22, the House of Representatives chose not to act to prevent the federal Temporary Extended Unemployment Compensation Act of 2002 (TEUC), which provided extended benefits, from expiring on December 28 (see MGH Community News July 2002 for further information, also on the department's website- Staff Access> Basic Needs> Employment/unemployment).

According to a report from the Center on Budget and Policy Priorities, the consequences for the unemployed will be immediate and dramatic:

At the end of the year an estimated 830,000 jobless workers who will be receiving these benefits will have them cut off immediately.

Starting on December 29, an addi-tional 95,000 jobless workers per week will run out of state unemployment benefits without finding a job and get no temporary federal unemployment assistance.

By the end of March, a total of 2.1 million jobless workers will not receive temporary benefits who would receive them under the Senate bill.

In Massachusetts the estimated number of workers who will be cut off TEUC at the end of December is 23,700. The estimated number of workers who will exhaust regular UI benefits between December 28 and the end of March is 37,300 for a total of 61,000.

The TEUC program will only have been in effect for less than 10 months. By contrast, in the wake of the recession of the early 1990s a temporary federal benefits program was in place for 30 months, or three times as long. The TEUC program will expire even though the number of jobs in the economy has actually decreased in the past two months and even though by a number of indicators the current economic slump has hit workers as hard as the recession of a decade ago.

Finally, according to the report, letting the TEUC program expire is precisely the wrong step to take when there is widespread agreement about the need for more, not less, economic stimulus. Letting the program expire will diminish economic demand among unemployed workers. Unemployment insurance provides well-targeted economic stimulus; its benefits increase consumer spending in the hardest-hit areas and among the hardest-hit workers. Moreover, unemployment benefits go to workers who are likely to spend them quickly, as many of these workers are facing economic hardship and need additional income to meet immediate household needs. Boosting consumer spending quickly is widely viewed as one of the most effective ways (if not the most effective way) to sustain and strengthen the economic recovery.

Moreover, it is also possible that Congress will not act in early January to assist some, most, or all of these workers. Action could be delayed well into January or February, further harming the unemployed, or might never happen at all.

11/2002