Will the U.S. Extend Unemployment Benefits?

As of this past December, just under 7% of Americans are unemployed. While economists see this jobless percentage as well within expected limits, this is little consolation to the more than 4 million out-of-work Americans. Given that nearly half of these are long-term unemployed, there are economic ramifications as these Americans are more removed from the economy. 

During his State of the Union address this past week, President Obama announced that he would push Congress to extend unemployment benefits as a stopgap effort. With federal unemployment benefits in place since June 2008, it has been increasingly difficult to continue the benefits as budgetary concerns have mounted. Up until now, all previous attempts at unemployment restructuring have been resounding failures due to partisan conflicts.

That may change with the newest attempt. For the first time since benefits lapsed in December 2013, both parties are making cautious moves to extend insurance once more. While both parties continue to point toward the other as the rate-determining factor, Senate Majority Leader Harry Reid (D-Nev.) commented that he is "cautiously optimistic that Republicans will heed their constituents at home and help Democrats restore emergency benefits to Americans in need."

This new deal depends on a couple things, not least of which is Reid's Senate being opened up slightly more in procedural matters. Fearful of being bogged down in political ideology, the process has been extremely slow.

Why does this matter?

Economists point out that long-term unemployed Americans' consumption contributes less than .25% annual GDP growth. Normally, such a small contribution could go unrecognized, but with growth still relatively anemic, even this minor contribution could make a huge difference in the US economy. 

Politicians are unsure currently as to how this newest proposed extension will be financed; there are indications that the proposed three month/$6.4 billion extension would be paid for by "pension smoothing." If this is the case, there may be long-term implications for federal employees as pension investments will be taxed more heavily. 

What if this works?

If this amendment is successful and benefits are extended another three months, then the long-term unemployed will receive income for a little while longer. Unfortunately, this would seem to only shift the problem three months down the road. Despite the intention of the administration to also raise minimum wages, the real question is whether or not Obama's secondary commitment is carried out effectively; seeking to employ the 4 million noted above, Obama has called for companies to remove employment practices that give preferential treatment to applicants that are currently employed. 

With 300 companies currently signed onto a government-inspired pact, optimism seems rather misplaced as many of the companies are shifting to more subtle tactics. Many job applicants have reported an increase in comments referencing over-qualification instead of age-related comments as a reason for unemployment. Additional skepticism has arisen by the pro forma commitment by companies without a great deal of concrete planning to back this pact.

What if it doesn't?

To be perfectly frank, if the newest amendment does not come through, then it will just mean a continuation of the status quo. However, both politics and business have much more to lose than they have to gain by blocking an extension of unemployment benefits. Despite not knowing where to go, it seems to be in everyone's best interest to see a swift and favorable conclusion to the ongoing Congressional negotiations.

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Read/Post Comments (29) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 07, 2014, at 12:02 PM, mark636 wrote:

    Are we going to keep America on unemployment until Obama is out of office? This was the cost of Obamacare

    Even thought the media convinced America we do not have a debt problem how would this extension be paid for?

  • Report this Comment On February 07, 2014, at 12:07 PM, vulture6468 wrote:

    Just wondering what the point of negotiating a budget deal and having it signed into law when within 60 days, the very same people are voting to add spending not in the 2 year budget bill. Seems like a gigantic waste of time on the part of everyone, congress and the President.

  • Report this Comment On February 07, 2014, at 12:24 PM, Ruthie53 wrote:

    Obama has brought our Country to our knees, but he is not done. Obama plans on calling Marshal Law before his term is up, he wants everybody to be living on some sort of Benefit. I know that some of you have been living on un-employment for two years, but in that time you could have started your own businesses or took a job that is different from the one you had or started to college and got even more money to help out. I know somebody that did this and he was in college trying to go to school and raise a family, so he got HUD to help him with his rent, he was paying $600 a month and HUD paid $570.00 of that and he only had to pay $30.00 a month. Social Services also has Grant Money to Pay anyone's electric or gas bill up to $600 a year per person, plus the food stamps, Medicaid, they pay your childcare if you can't afford it, so help is out there if you need it, you have to ask about it because it is not advertised.

  • Report this Comment On February 07, 2014, at 12:25 PM, ghstdncr1969 wrote:

    If no EUC how is anybody suppose to get any health care, no income, no EUC, no health care. Also how about the troops coming back from a war and no job for them, they can't get an education for a different job because no income, no EUC, no education for a new job. Now answer that one.

  • Report this Comment On February 07, 2014, at 12:42 PM, jammerk65 wrote:

    we need jobs !,, and we need them now !!!,,,not more lie's about how the unemployment situation is getting better !!!

  • Report this Comment On February 07, 2014, at 1:00 PM, sherik wrote:

    nope because it is not corporate welfare

  • Report this Comment On February 07, 2014, at 1:30 PM, TADickey wrote:

    I am a female with no financial help or money after my unemployment runs out. I have been unemployed since 8/2013 and I have only had 5 interviews and only I-(2 day temp job).

    Since there hasn't been an 'extention' put in place on unemployment, I am two weeks away from drawing any benefits. I have a folder full of hundreds of jobs I've applied for. I have been told by several that it's my age (61). I have more experience that many who are applying for jobs and getting them. It most likely, since it states on my application how old I am, that I don't get noticed. My only option is that in a few months opt for "early retirement" at 62. (Another Gov't check and I am still able to workand want to). I have an appt. with an organization to help with free to low cost prescriptions. I guess I'll try Medicaid after I retire because I can't get Medicare until I'm 65.

  • Report this Comment On February 07, 2014, at 1:41 PM, WilliamBednarz wrote:

    Congress is using the unemployment benefits to increase the military spending budget as they have starting with the Fiscal Cliff....Go Back and examine the facts...%.42 cents of every tax dollar is being spent on non hostile - Special Ops Forces in over 100 foreign countries.....AQAP -Yemen?? Drone Attacks on non emenies ( I say non for non declared actions Shh......SECRET

  • Report this Comment On February 07, 2014, at 1:53 PM, senumale wrote:

    I used to be a proud Republician but not anymore/ this stupid bickering over this bill is hurting those of us who have gone past unemployment benefits now in emergency funding. Our savings that we had are gone or almost gone. Lets put the shoe on other footing/let these members of in Congress be out of work then whjen their funds run out be just like the AZZES they are acting like/screw them on extensions

  • Report this Comment On February 07, 2014, at 2:23 PM, ajones wrote:

    I don't have a problem with helping people for a limited amount of time but why should we continue to pay people to stay unemployed. I've walked past many a business that has HELP WANTED signs posted. Granted, they may not be what you are looking for as a career, but it would give people some self respect to work instead of living off someone else.

  • Report this Comment On February 07, 2014, at 2:30 PM, ComputerExpert wrote:

    A lot of us are just basically tee'd off about turning an insurance program, into a perpetual welfare program.

    People in states like California, Illinois, New York and other "Blue" areas, wanted Obama and his policies. Well, the OPM spigot is shutting down. Time to get back to work and get off your duff and the video games. Watching Oprah windbag, isn't helping either.

  • Report this Comment On February 07, 2014, at 2:47 PM, lostinvt wrote:

    Ok it's all ok for some of you who choose to say they shouldn't get more then 26 weeks hmm wow for someone like me who has work at the SAME job for 17 years loses there job no notice so I don't deserve to get the extention !!!! What about the people on welfare that get in for well over 5 years that I as a tax payer pays for yeah that's right you self ricious asses that's ok that we keep giving to them every month free insurance , free food, free rent, free heat yup that's not a problem but to help the ones that have been out of work for 6 months shoot us to the curb !!!! Screw u!!!!

  • Report this Comment On February 07, 2014, at 2:48 PM, AmericanCitizen wrote:

    If it is balancing a TRILLION dollar budget that EXCLUDES millions of unemployed, hungry and homeless American citizens and our children, how can this CONGRESS call itself a just representative of this nation's people?

  • Report this Comment On February 07, 2014, at 2:54 PM, fingerlakes54 wrote:

    Unemployment benefits will be extended. Walmart sales are flat--JC Penny near bankruptcy--small business owners feeling the pinch because unemployed families now have about $80 less a week to spend. Even Republicans as crazy as they are ---must now realize that taking money out of the economy when it's on thin ice as it is now --is economic suicide.

  • Report this Comment On February 07, 2014, at 3:01 PM, DaytonaDan wrote:

    Hey "Fool", your publicaton and web site are in the business of business, your leftest foray into politics is annoying. The "checks" have been extended 11 times, enough is enough. "If you give a man/woman a fish they will eat for the day, teach them to fish, they will eat for a lifetime,", blah, blah, blah, you get the point. I offer your comment about "Reid's senate". Therein lies much of the problem, Reid's heavy handed rule coupled with Obama 's incompetence, and we have a country and an economy put on hold and sinking deeper and deeper into debt. While the USA burns,Obama, Reid, Pelosi play their fiddle.

    That settles that, please give me/us more business info and investment help, so we can pay for these people not to work and increase more of Obama's programs of buying dem's votes at the expense of working Americans.

  • Report this Comment On February 07, 2014, at 4:01 PM, werethefool wrote:

    Wake up America..we lost our jobs by the thousands the eight years Bush continued to allow American manufactures to go to China and set up shop,then allowed them to inport the crap back hear,allowed the profets to be put in off shore banks. T he jobs are gone, so The Republican whant to cut unemployment off, why so some of ther rich wesele friends can buy up there homes cheap and flip them..VOTE EVERY WEASELE REPUBLICAN OUT OF EVERY OFFICE, CITY, STATE, AND FED

  • Report this Comment On February 07, 2014, at 4:34 PM, thewacokid79 wrote:

    Companies just need to start hiring again. I've been out of work now for a year. I went back to school and got a certificate in Golf Course Management. I live near tons of courses. In the mean time, I've applied to McDonald's, Wal-Mart, Lowe's, Home Depot, Pepsi, Chili's, warehouses, hotels, and city jobs. It's got to start with these companies giving people a fair shake. Most of these jobs are well below my pay grade, but I have nothing else. I need to take that 8.00 job because I've got nothing left to fall back on.

    As far as Washington goes, we need to elect new blood, and if the new bloods not cutting it, re-elect these fools until we get it right. We bailed out everyone on this earth but are own. We give millions of dollars to other countries, banks, the auto industry. They take are money and give us nothing in return.

    We need job creation, here in the states. Give corporations a reason to do business here in the USA. But in the mean time we need Congress to pass this extension, and business needs to hire. One last thing to all the people that are calling everyone on UI lazy. I was a causal letter carrier for the USPS for 5 years. No benefits, no vacations, 6 days a week 50+ hours, 7 days a week during the holidays. When the USPS didn't need me anymore they laid me off, just like that.

  • Report this Comment On February 07, 2014, at 5:39 PM, quasimodo007 wrote:

    he Evil Te and evil GOpp congress only Takes Care of their Mafia style GREEDY Privilege CROOKS of wall street with Huge Billions Dollars TAX Breaks .

    Nothing for the Homeless ,Unemployed VET, lunch and food stamps for children and Poor .

    the Evil Gop congress and their Mafia style Privilege Crooks MOtto LET THEM EAT CAKE

  • Report this Comment On February 07, 2014, at 6:51 PM, grandc wrote:

    This is all a bit funny. Harry Reid says that he is in favor of helping the long-term unemployed, yet he was the lone Democrat that voted against the bill yesterday. OK. Harry, can you make up your mind which side of the fence you're going to sit on. Let's let all these politicians do w/o their stipends and such and let them live not knowing if they will be able to pay rent and such. Let's see how soon they come to an agreement when it affects them directly.

  • Report this Comment On February 07, 2014, at 6:57 PM, RobertB4040 wrote:

    Let's put homeless shelters in the neighborhoods of these senators and their constituents, that way they have to actually see and live with the destruction they've caused. If after that, they're still willing to cause it in the future, then that's only fair. Please sign the petition:

    http://www.petition2congress.com/13805/make-effects-cutting-...

  • Report this Comment On February 07, 2014, at 9:48 PM, Cheri wrote:

    Why isn't Obama pushing this extension? We have seen him once on television, the 1st of the year - that is it. I wasn't on it the year before, but he was on television pushing for it CONSTANTLY. Why aren't there people in power up there talking about it; Al Sharpton for one. Why aren't people demonstrating over this? Katie Couric & Marie Schriber said the same thing. As long as the people do nothing about this - this time around, nothing will be done. WHY aren't people demonstrating??? If I could afford the air fair - I can tell you I would be on my way up there. There are people up that that need this ext. also - why aren't they demonstrating?

  • Report this Comment On February 07, 2014, at 10:45 PM, Sonsus111 wrote:

    For all of you who don't know the only reason Harry Reed only voted no because that's the only way he could get them to vote again. God bless the people who have a job right now because they do not know where they are going to be next year. I'm never thought I would be poor but that's what I am now after working all my life. So, employed until you walk in my shoes just shut the hell up and go do something else besides put people down when they already at rock bottom. Pray that your kids don't go thru nothing like this because of your hate.

  • Report this Comment On February 07, 2014, at 11:27 PM, delta331976 wrote:

    As a conservative and a 55 year old man that lost my job 7 months ago I never once thought it would take me more than a week or two to find a job. I have an ongoing medical problem with my back but I never missed a days work prior to my layoff. I only want to say a few things.

    All I want to do is work at an honest job so I can provide for my family. I was once a Golf Pro now I cant even swing a club. I want to work because I'm a father and a man that believes its my duty to work. I need to work for my health. I have no reason to NOT look for work. I'll shovel horse crap if I could get the job. Nuff Said ?

    One more thing - I didn't vote for Obama and it was during the Bush administration the EUC program was started. So lets stop blaming Obama for EUC. And yes sooner or later it does need to end and if its me that bites it then so be it. When you fall you get up - life is not fair so live with it.

  • Report this Comment On February 08, 2014, at 2:52 PM, republicanssuck wrote:

    I hope you guys remember this at vote time, NO REPUBLICANS should get in,, or just make it harder let them sweat it out,,

  • Report this Comment On February 08, 2014, at 2:52 PM, jose52054 wrote:

    Viva Obama! The rich can choke on their money, in the end money means nothing and you can't take it with you. I am perfectly happy with the little I got. Obama is the greatest president we ever had.

  • Report this Comment On February 10, 2014, at 12:27 AM, Cannotgethired wrote:

    For those of you that think that us long term unemployed are not applying for minimum wage jobs, or jobs that were not qualified for, I'll tell you that I personally have put in 40-50 applications in the past year and have not even gotten ONE single call back from any of these companys. I can't even get hired at wal-mart! I will work for any wage. I have NO INCOME at all. I have health problems that I can't afford to see my doctors about. I have signed up for the only free clinic in my area. I am not working because I don't want to. I worked about 3 months total last year through my union job, but there just isn't enough work for everyone. If this gets stopped again I will never again vote for a republican. Some people are so out of touch with this issue because you have a job.

  • Report this Comment On February 10, 2014, at 12:29 AM, Cannotgethired wrote:

    I am not working NOT because I don't want to

  • Report this Comment On February 11, 2014, at 6:13 PM, anyjob2 wrote:

    I have applied to over 300 jobs from fast food to management and have received only 5 call backs from all of them. I would take any job no matter the pay and feel that it is a losing chance that I even get a call. I feel they are just doing it to fulfill some type of bias rule? I am about to lose what little I have left that would even help me get a job let alone to keep one if I ever got one.

    Yes there are those who take advantage of this system and need to be dealt with, but there are so many that rely on this that the government is only hurting us and not them. Instill more rules and make us prove we are trying because I know I am and many of us can prove it.

    You can only imagine how many people just turned democrats in one month than in 10 years time? Just ridiculous to leave those who are trying to find work and to have businesses sign a petition saying they will hire us is just a slap in the face we all know NOTHING will come of that EVER!

  • Report this Comment On February 21, 2014, at 6:59 PM, Nonunion wrote:

    I've been unemployed for 10 months now for the first time in my life. I've been applying for jobs from the day I was laid off, i have twenty five years of Administrative experience I've been on two interviews one a business school who wanted me to walk the streets and convince young adults to attend the business school, the head of the school told me all we have to do after getting them in is to keep them interested for three months and we are paid 16,000.00 per person. It upset me the kind of crap the gov allow, the other interview think they were looking for someone younger. I m starting to think I may have to move away to find employment, it's nothing going on in phila, pa.

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