Workers who lose their jobs typically are eligible for six months of unemployment compensation benefits paid for by their states. Though this usually provides enough time for them to find new jobs, that may not be the case during a recession.
Therefore, Congress usually creates a temporary program during economic downturns that provides additional weeks of federally funded benefits until an economic recovery is clearly underway. Unfortunately, the current program, called Temporary Emergency Unemployment Compensation, or TEUC, has two glaring weaknesses compared with the temporary one Congress created in the last recession: It lasts a much shorter time and provides substantially fewer weeks of benefits.
As a result, many unemployed workers are exhausting their temporary benefits before they find work. Before the year ends, more than 2 million workers will have used up their TEUC benefits, primarily because fewer weeks of benefits are provided than in the previous program.
Congress created the TEUC program in March as part of its economic stimulus package. It expires at the end of the year. In contrast, during the recession of the early 1990s, Congress acted five times to extend the program, compared with the single 9 1/2-month term of the current program should Congress fail to act. A bipartisan group of senators introduced a bill last week to provide additional weeks of benefits and to extend the life of the program.
Allowing the TEUC program to die before the employment picture improves would be a serious mistake. Unemployment is as high now as it was when Congress created the program. And the Congressional Budget Office predicts that unemployment will remain at about this level until the second half of 2003.
Congress' reluctance to extend TEUC may reflect the belief that the current recession is a fairly mild one. Unemployment has been hovering at about 6%, well below the peak of the last recession, and it even fell slightly last month. In addition, until this summer, the economy seemed poised for recovery.
Neither of these arguments now seems very convincing. The current recession is really no milder than the last one. In each case, the unemployment rate rose by about 2 percentage points during the first 18 months of the downturn. Unemployment is lower now than during the last recession only because the rate just before the recession started was much lower than in 1990.
