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Loss of jobless aid leaves many with bleak options

1/13/2014

By JOSH BOAK and SAM HANANEL

Associated Press

WASHINGTON -- A cutoff of benefits for the long-term unemployed has left more than 1.3 million Americans with a stressful decision: What now?

Without their unemployment checks, many will abandon what had been a futile search and no longer will look for a job -- an exodus that could dwarf the 347,000 Americans who stopped seeking work in December. Beneficiaries have been required to look for work to receive unemployment checks.

Some who lost their benefits said they'll begin an early and unplanned retirement. Others will pile on debt to pay for school and an eventual second career. Many likely will lean on family, friends and other government programs to get by.

They're people like Stan Osnowitz, a 67-year-old electrician in Baltimore who lost his state unemployment benefits of $430 a week. The money put gasoline in his car to help him look for work.

Osnowitz said a continuation of his benefits would have enabled his job search to continue into spring, when construction activity usually increases and more electrical jobs become available.

He said he's sought low-paid work at stores such as Lowe's or Home Depot. But he acknowledges at his age, the prospect of a minimum-wage job is depressing.

"I have two choices," Osnowitz said. "I can take a job at McDonald's or something and give up everything I've studied and everything I've worked for and all the experience that I have. Or I can go to retirement."

Unemployment benefits were extended as a federal emergency move during the 2008 financial crisis at a time of rising unemployment. The benefits have gone to millions who had exhausted their regular state unemployment checks, typically after six months. Last month, the extended-benefits program was allowed to expire, a casualty of deficit-minded lawmakers who argue the government can't afford to fund it indefinitely and unemployment benefits do little to put people back to work.

The duration of the federal benefits has varied from state to state up to 47 weeks. As a result, the long-term unemployed in Rhode Island, for example, could receive a total of 73 weeks -- 26 weeks of regular benefits, plus 47 weeks from the now-expired federal program.

Outside Cincinnati, Tammy Blevins, 57, fears welfare is her next step. She was let go as a machine operator at a printing plant in May. Her unemployment check and a small inheritance from her father helped cover her $1,000-a-month mortgage and $650 health insurance premium. Now, with her benefits cut off and few openings in manufacturing, she dreads what could be next.

"I'm going to have to try the welfare thing, I guess," Blevins said. "I don't know. I'm lost."

Others plan to switch careers. After being laid off last summer as a high school history teacher, Jada Urquhart enrolled at Ohio State University to become a social worker.

Urquhart, 58, already has borrowed against her house, canceled cable-TV and turned down the thermostat despite the winter chill. Without an unemployment check, she plans to max out her credit cards and take on student loans to complete her degree by 2015.

"I'll be 60 when I graduate," she said. "If I do one-on-one or family counseling, I can work forever."

Urquhart finds herself in sympathy with members of Congress who want to limit government spending. At least in theory she does.

"It's just hard when you're the one getting shrunk," she said.

One sign of the persistently tight job market: The percentage of Americans either working or looking for work has reached its lowest monthly level in nearly 36 years, the Labor Department said Friday. The unemployment rate fell in December to 6.7 percent from 7 percent. But that drop occurred mainly because more Americans stopped looking for jobs, many of them out of frustration. Once people without jobs stop looking for one, the government no longer counts them as unemployed.

Because unemployment benefits require recipients to look for work, many who would have given up kept seeking a job. The federal benefits eased their financial hardship. But the fundamental problem goes beyond unemployment aid: A shortage of decent-paying jobs for those still coping with the aftermath of the Great Recession.

Jesse Rothstein, an economist at the University of California, Berkeley, who has studied the long-term unemployed, has found that extended benefits help both the recipients and the economy -- by fueling consumer spending.

"A Band-Aid doesn't heal a serious wound, but that isn't much of a reason not to use one," Rothstein said.

The trend of people ending their job hunts once their benefits expire already has emerged in North Carolina, which started cutting off aid in July. North Carolina's unemployment rate sank from 8.8 percent in June to 7.4 percent in November, but mainly because people stopped their job searches.

But some congressional Republicans argue guaranteed unemployment checks that go on for more than a year lead many workers to take excessive time to try to land an ideal job, instead of settling for whatever they can find.

Senate Democrats and President Barack Obama have pushed to restore the program. But they need to agree on how to pay for it-- a key demand from Republicans concerned about a potential $20 billion hit to the federal budget deficit.

The longer people remain jobless, the more likely their skills are to erode and the more likely employers are to ignore their resumes, according to economic research. The result is that many eventually stop looking for work and turn instead to other government programs such as Social Security Disability Insurance.