kpix-7-2013-masthead kcbs 7-2013-masthead

End Of Unemployment Checks Hits Households Hard In California, Nationwide

View Comments
Job seekers look at job postings that are displayed on a bulletin board in San Francisco. (Photo by Justin Sullivan/Getty Images)

Job seekers look at job postings that are displayed on a bulletin board in San Francisco. (Photo by Justin Sullivan/Getty Images)

SAN FRANCISCO (CBS/AP) — The end of unemployment checks for more than a million people on Saturday is driving out-of-work Americans to consider selling cars, moving and taking minimum wage work after already slashing household budgets and pawning personal possessions to make ends meet.

The end to the five-year program that extended benefits for the long-term jobless affected 1.3 million people immediately and will affect hundreds of thousands more who remain jobless in the months ahead. Under the program, the federal government provided an average monthly stipend of $1,166.

While the Obama administration and Democrats in Congress want to continue the program, the extensions were dropped from a budget deal struck earlier this month and Republican lawmakers have balked at its $26 billion annual cost.

The end of the program may prompt a drop in the nation’s unemployment rate, but not necessarily for a good reason. People out of work are required to look for work to receive unemployment benefits. As benefits disappear, some jobless will stop looking for work out of frustration and will no longer be counted as unemployed.

Some unemployed people said the loss of benefits might drive them to take minimum wage jobs to get by until they can find work at their skill level and in their field.

Since 2008, the federal program paid out benefits to the unemployed after their 26 weeks of state benefits ran out. At its peak, the program offered up to 73 weeks of federal benefits — which are typically offered during periods of high unemployment — to the long-term jobless.

James Sherk, a labor policy analyst at the conservative Heritage Foundation, said ending the extensions could induce workers to take jobs they might have overlooked initially. Extended unemployment benefits can give workers “a false sense of how much time they have before they have to start broadening their net to less than ideal positions,” he said, adding that the labor market, while not ideal, is stronger and continues to improve.

In November, the country’s unemployment rate fell to a five-year low of 7 percent, but is still above the 5 percent to 6 percent rate that would signal a normal job market. And long-term unemployment remains a problem for the economy as nearly 4.1 million Americans have been out of work for six months or more.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

View Comments
blog comments powered by Disqus