Our country has forgotten the lessons of the Great Recession

Our country has forgotten the lessons of the Great Recession
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Ten years ago this month, America fell into the Great Recession. The number of unemployed Americans doubled from 7.6 million in December 2007 to over 15 million in September 2009. What kept many families afloat was unemployment insurance. But today the unemployment insurance program is in far worse shape than a decade ago, with many states gravely unprepared for the next inevitable downturn.

By all accounts, unemployment insurance, a federal-state program designed to provide some measure of financial security to workers who lose their jobs involuntarily, did what it was supposed to do, softening the recession’s impact on families hit by job loss and giving local economies a much-needed boost in consumer spending.

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Between 2008 and 2013, more than 60 million jobless workers received unemployment insurance, including 24.5 million workers covered by a temporary extension program authorized by Congress in 2008 to help the long-term unemployed. At the peak of the recession, two-thirds of all unemployed workers were receiving a weekly unemployment insurance payment. Economists say that between 2008 and 2012, unemployment insurance lifted 11 million Americans above the poverty line and prevented 1.4 million home foreclosures.

Today, however, the unemployment insurance programs in many states are failing the people whom they’re meant to help. Most states had to borrow from the federal government to pay benefits during the recession, so when unemployment insurance taxes on employers increased so that states could pay back the loans, business groups lobbied their state legislatures to shift the costs onto workers instead by cutting benefits, restricting eligibility, and in some instances, by making it harder to apply for benefits.

As a result, the share of jobless workers receiving unemployment insurance has fallen by 25 percent since 2007, even though unemployment rates have been comparable. Since 2014, only slightly more than one in four unemployed workers is receiving a state unemployment insurance benefit. A new report by the National Employment Law Project details some of the resulting damage inflicted on state unemployment insurance programs over the past six years.

One troubling trend has been states cutting the maximum number of weeks that an unemployed worker can receive unemployment insurance benefits. For more than 50 years, every state adhered to a nationally recognized standard maximum of 26 weeks of benefits for workers with substantial recent work histories. Since 2011, however, nine states have slashed their maximum weeks, some by as much as half, with states like Florida and North Carolina currently offering no more than 12 weeks and 13 weeks, respectively.

Such drastic cuts ignore the fact that the average length of time that an unemployed person is out of work today is six months. Cutting short the weeks of available benefits leaves unemployed workers racing the clock and taking jobs that are not as good as the ones they lost. The result is a kind of economic scarring with too many families pushed further down the economic ladder simply because a breadwinner was unfortunate enough to experience a period of joblessness. The last thing we should be doing is pulling the rug out from under jobless workers at a time when our nation faces staggering income inequality and an ever-shrinking middle class.

By nearly every measure, state unemployment insurance programs are protecting fewer jobless workers. States like Indiana have excluded whole categories of low-wage workers from eligibility during periods in which their employers traditionally shut down operations. Other states have imposed onerous work search reporting requirements. As claim-filing systems have “modernized” and become more complex, more workers than ever are being denied benefits for technical filing mistakes. Meanwhile, as systems become less accessible for workers with language and literacy barriers and those with limited internet access, the percentage of jobless workers applying for unemployment insurance is dropping dramatically.

States must take the necessary steps to turn around these troubling trends. Maintain or restore the 26-week maximum. Supplement federal administrative dollars with state funding aimed at improving customer service. Apply common sense to issues like work search and place a premium on providing jobless workers with clear explanations of their responsibilities. Build systems that are understandable and accessible to regular people.

With unemployment at 4.1 percent right now, it’s easy to dismiss talk of recession and joblessness. But states without strong unemployment insurance programs will experience profound pain when the next economic downturn happens, and it will. That’s why it’s so important for states to begin now rebuilding programs that will achieve unemployment insurance’s original goal to help sustain workers and communities through the economic harm that comes with losing a job.

George Wentworth is senior counsel at the National Employment Law Project. He previously served at the Connecticut Department of Labor.