Dec. 17, 2011 – 1:48 p.m.

Jobless Aid Extension Would Still Allow Some Benefits to Run Out Soon

The two-month extension of an expiring payroll tax cut that the Senate passed Saturday includes a major concession by Democrats that will reduce aid to thousands of jobless workers, although it preserved some long-term unemployment benefits that House Republicans had voted to cut.

Under current law, which would be extended for two months under the Senate-passed payroll tax measure (HR 3630), the federal government pays for either 13 or 20 weeks of supplemental benefits for long-term jobless workers, depending on a state’s unemployment rate and on how that rate has increased over the past three years, a provision known as a “look back.”

Because state unemployment rates, although high, have not increased much in the past three years, those supplemental weeks will start tapering off. Democrats had wanted either to extend the duration of the “look back” provision for a fourth year or remove it entirely to allow jobless workers in the hardest-hit states to continue receiving up to 99 weeks of benefits.

The Senate-passed bill does not include any language on the look-back provision, nor on any eligibility criteria for long-term benefits. It simply would extend existing programs through the end of February. That means people who have been unemployed the longest and who currently receive benefits in 13 states will see those benefits come to an end in the first two months of the new year.

The maximum number of weeks of jobless assistance will be reduced, even though many of those states — Mississippi, Michigan, Rhode Island and South Carolina — continue to report double-digit unemployment rates. Other states on that list — Indiana, Kentucky, Ohio, Oregon and Tennessee — have unemployment rates higher than the national average.

President Obama would have allowed the extended benefits program to phase out in his September jobs package. The House-passed version of the payroll tax bill also would allow those benefits to run out. This change accounted for 20 of the 40 weeks of unemployment compensation that House Republicans proposed to cut.

Some Democrats are upset because the Senate measure does not address the extended benefits phase-out. “With very little warning, tens of thousands of long-term unemployed Americans will be cut off unemployment insurance,” Michigan Rep. Sander M. Levin, ranking Democrat on the Ways and Means Committee, said in a written statement. “Our nation’s workers thrown out of jobs through no fault of their own deserve better.”

And Sen. Jeff Merkley, D-Ore., said he voted for the extension although he was disappointed with the unemployment benefits language. “It won’t help our state because of the three-year look-back provision,” he said.

Allowing extended benefits to expire is expected save roughly $1 billion over the course of next year.

“It is really a shame to lose that last level of benefits because it, more than anything else, helps the people who are hit the hardest in the worst-hit states,” said Judy Conti of the National Employment Law Project. “State agencies — very, very soon, probably right after the holidays — are going to start sending people letters saying your time is coming to an end. That’s a brutal way for the long-term unemployed to start the new year.”

Sam Goldfarb contributed to this story.