Debate Stirring Over Extending Unemployment Benefits

Sharron Angle, Rand Paul say benefits encourage people to stay unemployed.

July 7, 2010, 6:03 PM

July 7, 2010— -- Michael Overholt, a construction worker from Carmichael, California, is one of the nation's 15 million unemployed people.

"The wife comes home and I'm sitting here," Overholt said. "You feel like you're not worth anything."

Overholt has been unemployed for almost four years. For the past 36 days, Congress has refused to extend jobless benefits for the long-term unemployed.

"We want to go back to work," Overholt said of the unemployed. "We're not taking unemployment and kicking back enjoying life."

The unemployment rate is 9.5 percent, hovering just below double digits. The private sector added only 83,000 jobs in June, far short of the 200,000 needed to bring down the unemployment rate.

With the high unemployment rate and economists predicting that unemployment will remain high for the foreseeable future, policy makers are debating the best way to deal with the nation's jobless.

Perhaps the biggest problem is how to deal with the long-term unemployed.

Tea Party Anger

In the public debate, opinion seems to be split about Overholt and others like him who have been unemployed for a long time. Some want to give them help as long as possible, extending unemployment insurance as long as they need it.

Perhaps most loudly, Tea Party-backed Republican Senatorial candidates wonder if continuing benefits that average just over $1200 per month is helping.

"They keep extending these unemployment benefits to the point where people are afraid to go out and get a job because the job doesn't pay as much as the employment benefit does," Sharron Angle, a Tea Party-backed Senate candidate in Nevada, said.

In Nevada, the unemployment rate of 14 percent is well above the national average. Currently, unemployment benefits last 99 weeks.

Across the country in Kentucky, Rand Paul, another Tea Party-supported Senate candidate who opposes extending the benefits, unemployment sits at 10.2 percent.

"In Europe, they give about a year of unemployment," Paul said. "We're up two years now in America."

Disincentive to Work?

In March, Senator Jon Kyl, the second ranking Republican in the Senate, spoke out against extending jobless benefits.

"Continuing to pay unemployment extensions is a disincentive for them to seek new work," Kyl said.

Today, the White House dismissed criticism that unemployment insurance is a disincentive for those looking for work.

"There's certainly no economic research that in a situation where I think there are five applicants for every job, that people are somehow sitting at home on the sidelines not hoping to gain long-term employment," White House Press Secretary Robert Gibbs said.

The conservative viewpoint has become fodder for comedians.

"You hear that people who have lost their jobs and are skating by on your $1200 a month," Jon Stewart joked on "The Daily Show." "The gravy train is over! Well, not so much the gravy as the ketchup packet soup train."

Karl Dinse, managing partner at Management Recruiters International, an executive search firm, is not so dismissive, because he said he's had job offers rejected by some unemployed people who are part of two-income families.

Unemployment insurance can be a disincentive to find work if you factor in child care costs, any side jobs and taxes, he said.

"It may not equal out to the $3,500 that they would net from a $5,000-a-month position, but clearly it will come pretty close," Dinse said.

Some Effect

Justin Wolfers, an economist and professor at the Wharton School of Business, said extended unemployment benefits may be affecting the unemployment rate, but in a small way. He said that by no way are the majority of the unemployed choosing jobless benefits over finding work.

"The best estimates suggest that the fact that we've extended the duration of unemployment insurance may have raised the unemployment rate by one half to maybe one percentage point," Wolfers said.

Far too common are stories like that of Veasley Fields. She is a former charter school administrator who can't find work.

"We're not trying to be lazy," Fields said. "Who wants to live off of $300 to $400 a week?"

Fields said that she couldn't even find work at McDonald's because there are no openings.

"We are dying now, we are losing everything we have," Fields said. "I bought my home because I wanted my grandchildren to be in my home and now I may lose my home because I have no money."

Stephanie Smith and Arlette Saenz contributed to this report.

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