Almost 77,000 Texans — including 2,000 Travis County residents — will lose federal unemployment benefits at the end of the month under the terms of the federal budget deal the Senate is expected to pass Wednesday.
The bipartisan deal, struck earlier this month in an effort to avoid yet another budget cliffhanger and a government shutdown, did not include a provision to extend the emergency unemployment benefits that were initially enacted in 2008 to alleviate the sharp rise in unemployment during the recession and its aftermath.
About 1.3 million U.S. workers will lose the extended benefits on Dec. 28, although Democratic party leaders said they hope to reinstate the federal unemployment insurance when Congress reconvenes in January.
In Texas, the federal benefits supplemented the 26 weeks of state-provided unemployment insurance, which is funded by employer taxes. At the worst of the labor market woes, jobless Texans who were actively seeking work could get up to 99 weeks of unemployment benefits.
The length of those benefits was scaled back as the state’s unemployment rate hit certain federally mandated thresholds. Currently, unemployed workers in Texas who exhaust their state benefits can qualify for 28 additional weeks of federal unemployment insurance.
According to Texas Workforce Commission estimates, about 76,800 out-of-work Texans had qualified for those benefits as of mid-November and will no longer receive payments as of Dec. 28.
“We would not be able to speculate on how many of those currently receiving regular (state-provided) unemployment benefits will be affected by the ending of the emergency unemployment compensation program,” TWC spokesman Mark Lavergne said in an email. “We think it is fair to say that a good portion of unemployment benefit recipients will find new employment before being affected by this deadline.”
Travis County currently has a total of 2,053 active filers for the federal unemployment insurance, said Alan Miller, executive director of the Capital Area Workforce Board. They also will not receive the extended benefits after Dec. 28, he said.
“Some of those will roll over to the public assistance rolls,” Miller said. “Some will find the means to get by, whether through the underground economy or some other means.”
Research published in recent weeks by the National Bureau of Economic Research suggested that the extended federal benefits have helped hold the national unemployment rate at elevated levels—although not necessarily by making it easier for people to avoid work.
Rather, the research suggests, unemployed workers who might otherwise just give up on their job search and drop out of the labor force will stay engaged as they fulfill program requirements to actively seek work.
Texas regulations require that workers have three documented job-search contacts per week. In Travis County, Miller said, the minimum is five.
Nationally, economists expect many of those who lose the emergency benefits to leave the labor force altogether—a factor that, ironically, would likely help reduce the official unemployment rate.
To actually get more people back into the labor force, Miller said, workforce programs need to do a better job of addressing the gap between workers’ skills and employers’ needs.
“We have them look for work, but we’re not doing anything with the system to help with their skill development,” he said.
Miller suggested that a short, required training curriculum could help prime unemployed workers for new jobs with new skills.
That could be increasingly important following the recession, which has left more workers jobless for a longer period of time. While national jobless rates for people out of work about a month have returned to pre-recession levels, longer-term unemployment remains doggedly high.
A recent study by Rand Ghayad, an economics Ph.D. candidate at Northeastern University, found that many employers will discard applicants who have been out of work six months or more, despite their qualifications.
In many cases, employers are just discarding those résumés out of hand. But it’s also true that, as workers languish longer and longer without jobs, their skills can calcify and they can become less qualified for a rapidly changing workplace.
“If you keep extending benefits, but you don’t have skills to find a job, it just goes on and on and on,” Miller said. “Let’s tie benefits to some type of skill-development effort so people can, on a short-term basis, get some skills training and updating so they can reattach to the labor force.”