The decision by Sens. Dan Coats (R-Ind.) and Rob Portman (R-Ohio) to join a filibuster of a measure to renew emergency jobless benefits is not only a moral disgrace, as Robert Borosage declared Wednesday. The reason they cited for doing so would advance an unnecessarily punitive and economically destructive policy.
Coats and Portman were peeved at Senate Majority Leader Harry Reid for not allowing their “reform” amendment to be attached to legislation that would restore federal unemployment benefits to people who have been unemployed for more than 26 weeks who are still looking for work.
Their amendment would require people receiving emergency benefits to “accept any offer of suitable work” or have their benefits cut off if they refuse. “Suitable work” is defined in the amendment as “any work which is within such individual’s capabilities.” In other words, if the job you lost was an accounting position paying $60,000 a year, you would end up having to choose between taking an $8-an-hour job as a cashier or lose the income you need to keep searching for a job closer to your skills and previous income level.
“People are really kind of clueless about this,” said Jeffrey Wenger, a pubic policy professor at the University of Georgia. Wenger has studied the history of unemployment compensation and recently contributed an essay on low-income workers’ access to unemployment insurance to the book, “What Works for Workers” by the Russell Sage Foundation.
For one thing, the Coats amendment “is completely redundant with state law,” where there are already requirements that workers accept “suitable” job offers, Wenger said. Some of those state laws are quote onerous; you could literally have been a CEO and have to take a job as a street sweeper or else lose your benefits.
There is plenty of evidence that already millions of unemployed workers have accepted jobs that pay significantly less than the jobs they lost. Researchers at the National Bureau of Economic Research and the Hamilton Project were finding that people who lost full-time jobs during the Great Recession took on average a 17 percent pay cut when they found a new job. A major reason, as The Washington Post’s Wonkblog pointed out, is that while roughly 60 percent of the jobs that were lost during the recession were mid-level jobs that paid between $14 and $21 an hour, almost 60 percent of the new jobs pay less than $14 an hour.
This downward pressure on wages has undermined the economic recovery, such as it is, and will have ripple effects on individual households and the economy as a whole for years to come, in the form of reduced savings, lower payments into Social Security and Medicare, and less economic growth – which makes it harder to reduce the federal deficits that conservatives say they are so committed to reducing.
In any event, piling on more hair triggers to cut people off of unemployment benefits doesn’t change a fundamental mathematical fact: “We right now have a lot fewer job openings than we have unemployed people,” Wenger said. “Too few jobs. Too many unemployed. Changing the incentives of unemployment insurance is not going to change that.”
If anything, Wenger argues that there is a case to be made that the rules for who gets unemployment insurance and for how long should be more generous, not less. In fact, he says, they once were, in the 1950s and 1960s. In those days even some workers who voluntarily left their jobs but were unable to quickly find a new one could receive jobless benefits, he said.
Even in 1980, as rules regarding who could receive benefits were being tightened, 60 percent of people who were unemployed were receiving jobless benefits. However, by 2011, less than 33 percent of the unemployed were receiving benefits, according to research by Wenger.
This in part reflects the fact that the unemployment insurance system has not adjusted to the realities of the modern workforce, which is more female and has many more people whose primary job is part-time even though they would prefer full-time work.
Wenger said that this also reflects the fact that the unemployment system in the United States is unique in the global economy in that it gives employers “a huge incentive to have workers not collect their benefits,” because unemployment insurance premiums employers pay are based on the number of workers who collect benefits.
Keeping jobless people in the unemployment insurance system until they find a job that closely matches their skills and earning potential is sound public policy. Rules already in place require that people on unemployment insurance certify that they are looking for work and keeps them in a system where they can be offered assistance and support. “You keep people searching, you keep people attached to the labor force,” Wenger said.
Once that ends – as it has for the estimated 1.7 million people who so far have lost their emergency jobless benefits since late December – “some people will simply give up their search. And I don’t know what they do,” Wenger said. “They work in the underground economy or in some off-the-books activity.” (The Washington Post this week profiled people who are doing just that.)
If conservatives allowed Congress to do its job, there would be robust plans to put people to work, and there would be no hesitation in maintaining emergency jobless benefits for the long-term unemployed until those people could move successfully into the jobs created by initiatives approved by Congress. There might even be bold ideas about making more money available for unemployment insurance – a third-rail political issue in today’s political environment, but one worth tackling if we believe that every person who is out of work through no fault of his or her own should have financial support during their transition to a new job.
The last thing we ought to be doing is capitulating to conservatives like Coats and Portman, who insist on forcing more working people to accept a lower standard of living, even as the 1 percenters who bankroll Coats’ and Portman’s campaigns grab all of the fruits of economic growth for themselves.