Federal spending on long-term unemployment compounds budget woes

Federal spending on unemployment benefits could eclipse $165 billion this year, five times greater than in 2005, adding to growing budget woes, according to a study released Monday by the Pew Fiscal Analysis Initiative.

As the pool has grown of Americans out of work for a year or more -- 3.4 million or 23 percent of the workforce -- costs have risen exponentially, increasing from $33 billion five years ago to an expected $168 billion this year, half of which goes toward unemployment benefits beyond 26 weeks, according to the report. 

Extensions of unemployment benefits beyond the 26 weeks cost $44 billion in 2009, according to the report. 

Every industry, occupation, age and educational background have been affected by the recession. In March 2010, 44 percent of those unemployed were out of work for at least six months, the highest long-term unemployment rate since World War II. In 1983, those without work for that long peaked at 26 percent, according to the report. 

The economy added 162,000 jobs in March but the unemployment rate remained unchanged at 9.7 percent. That figure rises to 16.7 percent when long-term unemployed are included.

Once those age 55 and older, a relatively small part of the overall unemployed population, have the hardest time finding new employment. Nearly 30 percent of the age group remains jobless for a year or longer. 

Those with college educations also have struggled to find new work with 21 percent of workers with at least a bachelors degree out of work for a year or more compared with27 percent of unemployed workers with high school diplomas and 23 percent who have less than a high school diploma.

The Congressional Budget Office has projected that unemployment will hover around 9 percent through 2011 and won't return to a 5 percent until 2016, the report said.