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Unemployment Insurance Cuts in the Latest Deal

February 15, 2012 - by Donny Shaw

It’s not official yet, but it appears that Democrats and Republicans in Congress are on the verge of striking a deal on extending the payroll tax holiday and unemployment insurance benefits. While the payroll tax holiday would be continued in its current form under the deal, the policies governing extended unemployment insurance for the would change significantly.

Under the deal, long-term unemployed workers in most states would see their maximum length of benefits restricted, and they may face new drug testing and job retraining requirements to continue receiving benefits. Here are the details of the the deal as it currently stands, according to an outline obtained by CNN:


  • Extends current levels and length of unemployment benefits through May. After that maximum lengths of benefits decrease in steps.
  • On Sept. 1, max. unemployment benefits would fall to 73 weeks in the highest unemployment states. (GOP source says that’s 9% unemployment or more.)
  • On Sept. 1, unemployment benefits would drop to 63 weeks in states with average unemployment.
  • Drug testing: Republicans say the deal would allow states to drug test unemployment beneficiaries if a) they are unemployed because of a failed or refused drug test or b) if they are applying for jobs that require drug testing.
  • Long-term unemployed: would have to go through a “reemployment assessment”, according to Republicans. This would assess what skills and services they need to be hired and require that they participate in recommended programs.
  • Job search requirements: Republicans say the deal would issue a first set of “national job search requirements” for those receiving unemployment benefits. We are waiting for details on what that means.

These cuts will likely start to take effect while the average duration of unemployment is still at a historically high level. The details are not yet final, but it looks like the maximum length of unemployment insurance benefits will be reduced by 36 weeks in the 33 states that have unemployment rates below mean average and by 26 weeks in the 12 states that have unemployment rates above 9 percent. While national unemployment has ticked down recently, the average duration of unemployment is still high, at 40.1 weeks. That’s two weeks longer than a year ago when the unemployment rate was nearly a full percentage point higher than it is today. Unless the duration of unemployment reverses trebnd and starts going down, more and more unemployed people will start losing their government support before they find a new job under this deal.

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