Last February, Congress passed new rules concerning qualification for extended Federal unemployment benefits. Only three state still qualify for them, and they will lose those benefits in September. The extended benefits, which gave birth to the term “99ers” were tied to the unemployment rate in a state, and as unemployment rates dropped, the benefits ended. There are still 5 million Americans who have been unemployed for more than six months, down from the 6 million two years ago. No one can say how many of those million have found work and how many are simply out of the market. Now, the remaining recipients of extended benefits will lose them due to a end date set by Congress.
Unemployment benefits, while not technically welfare having been contributed to by both employers and employees, have made it possible for people to survive. They have provided money that has to be spent and which stimulates the economy. The benefits are not great, usually coming in at under $200 a week and subject to income tax.
Of greater concern is the way some states have handled unemployment benefits. Governor Rick Scott of Florida is the man who pushed for drug testing of welfare recipients, only to discover that welfare recipients use drugs at half the rate of the rest of the population, costing the state tens of thousands of dollars in reimbursement for those with clean tests. He also pushed a requirement in unemployment benefits that all filers must pass an on-line “skills test” to qualify for $275 a week in benefits. The National Employment Law Project has sued Florida because only 15% of those who should qualify are receiving benefits in Florida. The state’s unemployment rate has fallen from 10.6% last year to 8.7% this year, still above the national average. Like Nevada, which has the highest unemployment rate in the country, Florida has a tourism-dependent economy. Until the entire country is in full recovery, those states dependent on attraction-based or spending-oriented tourism will continue to have high unemployment rates. Those states whose tourism is more aimed at low-cost “stay-cations” – hiking, camping, fishing, boating, etc. – have recovered much of their tourist economy.
Losing unemployment benefits takes money out of the economy. If people don’t have money to spend, they can’t create demand for goods or services. That is what stimulus means, money to stimulate demand. Therein lies the difference between supply-side economics which is also known as trickle-down economics, and demand-side economics, also known as Keynesian economics. In supply-side, businesses build stuff and assume someone will buy it. That’s how Carly Fiorina almost tanked Hewlitt-Packard. In demand-side, people have money and want products, so companies have to make stuff. In a depression or recession, governments provide the funds so that people will have money to demand goods, creating an upward spiral.