In the coming months, up to 1.5 million jobless Americans will exhaust their unemployment-insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution.

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In the coming months, up to 1.5 million jobless Americans will exhaust their unemployment-insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution.

Because of emergency extensions enacted by Congress, laid-off workers in nearly half the states can collect benefits for up to 79 weeks, the longest since the program was created in the 1930s. But unemployment in this recession has proved especially tenacious, and a wave of job-seekers is using up even this prolonged aid.

Tens of thousands of workers have used up their benefits, and the numbers are expected to soar in the months to come, reaching 500,000 by the end of September and 1.5 million by the end of the year, according to new projections by the National Employment Law Project, a private research group.

Unemployment insurance is a lifeline for 9 million Americans, with payments averaging slightly more than $300 a week, varying by state and work history. While many recipients find new jobs before exhausting their benefits, large numbers in the current recession have been unable to find work for a year or more.

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Calls are rising for Congress to pass another extension this fall, possibly adding 13 more weeks of coverage in states with especially high unemployment. As of June, the national unemployment rate was 9.5 percent, reaching 15.2 percent in Michigan. The unemployment rate in Washington state was 9.3 percent, according to the Employment Security Department.

Job outlook bleak

Even if the recession begins to ease, economists say, jobs will remain scarce for some time to come.

“If more help is not on the way, by September a huge wave of workers will start running out of their critical extended benefits, and many will have nothing left to get by on, even as work keeps getting harder to find,” said Maurice Emsellem, a policy director of the employment-law project.

For many job seekers, any extension will seem a blessing. Pamela Lampley of Dillon, S.C., said she sat outside the post office in July and cried because “it was the first Wednesday in quite some time that I’ve gone to the mailbox and left without an unemployment check.” The jobless rate in her state is 12.1 percent.

Lampley, 40, who is married with three children, lost her job as a human-resources officer in January 2008 and had been receiving $351 a week, which covered the groceries and gasoline. Even so, she and her husband, who still has work as a machinist, were sinking into debt. Now she feels devastated because they cannot buy their son a laptop to take to college and she cannot give her 9-year-old son money for the movies.

In Ohio, where unemployment is 11.1 percent, Cathy Nixon, 39, a mother of four teenagers from Lorain, has been out of work for much of the time since June 2007, and her benefits — $313 a week — run out in September. She is fighting foreclosure and said she feared that when the benefits end, “we’ll be homeless.” She was unable to afford summer camp and baseball for her children, despite scrimping.

In ordinary times, employers pay into a state insurance fund, and workers who lose jobs draw benefits for up to 26 weeks. During recessions, Congress has often paid for extended coverage for an extra 13 or 20 weeks.

In 2008, as the recession deepened, Congress provided 33 extra weeks of benefits. This year, President Obama’s stimulus plan offered an additional 20 weeks in states where unemployment surpassed 8 percent, if they adopted new federally recommended rules governing these extra weeks. (South Carolina did not make the changes, and benefits there are running out more quickly.)

Currently, people can draw benefits for up to 79 weeks in 24 states and from 46 weeks to 72 weeks in others.

The stimulus law also, through the end of the year, provided an extra $25 a week to all recipients, exempted a portion of benefits from federal income tax, and subsidized COBRA health payments for the unemployed.

McDermott offers plan

Rep. Jim McDermott, D-Wash., chairman of House Subcommittee on Income Security and Family Support, said he would introduce a bill in September to provide 13 more weeks of coverage in states with unemployment rates of 9 percent or higher. “Legislators will line up quickly when they start getting calls from desperate constituents,” he said.

The cost would be $40 billion to $70 billion, but the expense would be temporary, McDermott said.

Some business groups remain skeptical. Douglas Holmes, president of UWC, a group in Washington that represents businesses on unemployment issues, said there were early glimmers of economic progress and it was premature to extend benefits again. The money might be better spent, Holmes said, creating jobs and training people to move into emerging industries.

Traditionally, many economists have been leery of prolonged unemployment benefits because they can reduce the incentive to seek work. But that should not be a concern now because jobs remain so scarce, said Lawrence Katz, a labor economist at Harvard.

For every job that becomes available, about six people are looking, Katz said. “Unemployment insurance gives income to families who are really suffering and can’t find work even if they are hustling to look,” he said.

With the economy still listing, he added, a temporary extension can provide a quick fiscal stimulus. And, Katz said, when people exhaust unemployment and health insurance, many end up applying for disability benefits, which become a large, unending drain on the Treasury.

Material from The Seattle Times archive is included in this report.

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