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.
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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.
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.
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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.
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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.