Will the U.S. Extend Unemployment Benefits?

Bipartisan infighting may be over (on one issue) ...

Feb 7, 2014 at 9:36AM

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.

The top stock for 2014

There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers