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November 7th, 2012 By German Lopez | News | Posted In: News, Economy

Ohio's Jobless Face Uncertainty

Expiration of unemployment benefits could hurt state's economy

unemploymentbenefits

It’s only one day after President Barack Obama’s re-election, and some groups are already demanding action. In a new report by left-leaning Policy Matters Ohio, the group says the expiration of federal unemployment benefits could leave Ohio’s jobless stranded.

If Congress doesn’t renew federal benefits, the impact in Ohio will be immediate and negative,” said Zach Schiller, research director for Policy Matters, in a statement. “Not only will the unemployed suffer, but the state economy will take a hit as well.”

If Congress and the president do not act by Dec. 29, funding for emergency unemployment benefits approved in mid-2008 will be cut off. Nearly 50,000 Ohioans have been getting federally supported benefits every week, and the bulk will be cut off if funding expires, according to the report.

Even without expiration, Ohio is already in a bad spot when it comes to insuring the jobless. Altogether, the number of unemployed receiving benefits is lower than the national average, according to the report. Since 2001, Ohio’s unemployed have received fewer benefits than the national average.

In 2011, 63 percent of Ohioans who filed claims received payments, while 71 percent of claimants all around the country got benefits.

The state program seems to be particularly weak. In 2012, the amount of unemployed Ohioans getting state benefits was 22 percent, while the national share was about 26 percent. The report shows getting fewer benefits in Ohio has been the majority trend for at least 29 years.

One statistic that drives the report’s point home is the fact the state only provides up to 26 weeks of benefits, yet the average unemployed Ohioan is jobless for 33.5 weeks, according to the U.S. Bureau of Labor Statistics. That means the average unemployed Ohioan would be left without unemployment benefits for 7.5 weeks if the federal program did not exist.

And it’s not like the benefits offer an easy ride. The benefits “are hardly magnificent,” says Schiller. “Three-hundred dollars a week, you’re not going to take a jet to Tahiti and spend time on the beach with that kind of money. So, in fact, what people do with their $300 a week is spend it on necessities and in their communities.”

Schiller says the trend is poor economics, and the federal and state government should make sure Ohio’s unemployed continue getting benefits they need.

“When I was in high school, we heard of unemployment insurance as what was called an ‘automatic stabilizer,'" he says. “When the economy went into a dive, you would see increases in unemployment insurance that would automatically help stabilize the economy. This was seen by economists as a very useful and important thing that would reduce the depth of recessions.”

Schiller’s claim is backed by economic data. In a May 2012 report, the Congressional Budget Office (CBO), the nonpartisan agency that measures the effect of federal budgets and policy, said the repeal of extended emergency unemployment benefits would lower spending by $26 billion in the 2013 fiscal year. It would also increase the deficit, according to the CBO report: “The weakening of the economy that will result from that fiscal restraint will lower taxable incomes and, therefore, revenues, and it will increase spending in some categories — for unemployment insurance, for instance.”

Unemployment compensation also kept 2.3 million people from falling into poverty in 2011, according to the U.S. Census Bureau.

 
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