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Helping the Unemployed
The New York Times | Editorial
Monday 05 May 2008
Americans don't have to wait for the statistics to know these are very
hard times. For the fourth month in a row, the economy lost jobs in April. The
economists said the contraction was not as bad as expected - 20,000 jobs
were shed versus an anticipated loss of 75,000. Not as bad as expected is cold
comfort.
The latest employment report shows other deepening problems for American workers,
including slower wage growth, cutbacks in hours, a sharp increase in the number
of part-timers who would prefer full-time work and lengthening spells of unemployment.
The White House response to the pain is to wait and see if things get even
worse before calling for help for the unemployed. On Friday President Bush said
that his administration had anticipated the slump and would combat it with tax
rebates that were passed last February as part of the economic stimulus package.
There is no guarantee, however, that the rebates - which are just now
being distributed - will spur the economy as hoped. Rather than spend
the money, many indebted consumers are likely to use it to pay down debt, and
some people, justifiably fearful of job loss, are likely to save it.
Besides, there's no more time to wait and see. In April, the number
of Americans who had been out of work for at least 27 weeks (26 weeks is when
unemployment benefits run out) rose to 1.35 million workers. In the past year,
2.74 million jobless workers have exhausted their benefits.
Job loss is clearly a hit to families' finances and, in the aggregate,
to consumer spending and economic growth. Job loss coupled with the exhaustion
of unemployment benefits leads not only to personal desperation, but will further
damage consumer confidence, already sorely tested by the housing bust, the credit
crunch and soaring prices for food and gasoline.
What is needed - now - is for Congress to extend jobless benefits
for people who exhaust their initial 26 weeks of payments. Research is unequivocal
that bolstered jobless benefits are more effective stimulus than tax rebates.
They also have the advantage of being targeted to people in need.
The extension could be attached to the supplemental spending bill for the Iraq
war, which may come before Congress as early as this week. Predictably, President
Bush is balking, mainly because of his wrongheaded belief that tax cuts are
the best solution to all problems.
The White House has also asserted that with the overall unemployment rate hovering
around 5 percent, joblessness is not yet bad enough to warrant an extension
of unemployment benefits. But in prior recessions, benefits had already been
extended when long-term unemployment reached the current level. And in recent
recessions, the unemployment rate didn't peak until the recession was
basically over. Waiting for the rate to rise before extending benefits is almost
sure to result in offering too little help, too late - deepening the
pain of the recession.
Congress erred by not extending unemployment benefits in last February's
stimulus package. Lawmakers and Mr. Bush now have a second chance to fix that
mistake. They must not squander it.
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