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With Benefits Cut, Unemployed Take Stock Of Dwindling Options

Visitors use the Unemployment Insurance Phone Bank in Sacramento, Calif., on Sept. 20. Tens of thousands in the state lost federal unemployment benefits in December.
Rich Pedroncelli
Visitors use the Unemployment Insurance Phone Bank in Sacramento, Calif., on Sept. 20. Tens of thousands in the state lost federal unemployment benefits in December.

In November, 222,000 Californians opened their mailboxes to find a warning: Unemployment benefits were scheduled to end in December.

While Congress was inching closer to passing a budget, Emergency Unemployment Compensation was not part of the deal. That's the long-term jobless benefits: extra federal money that allows unemployed workers to collect payments for months longer than they could in better economic times.

Sure enough, on Dec. 18, Congress passed that budget and packed up for Christmas recess, leaving those extended benefits to expire just 10 days later.

So what happens to people and families whose payments were cut off?

Returning Presents

"I followed it every week, and I was just like, did they really just go home?" says Ruth Mills, one of those Californians affected.

Mills, 28, lost her job as a construction estimator back in June.

"I was already on unemployment so I didn't have a lot of money. But a couple things my wife asked for for Christmas were very small, and a couple of things ... she asked me to get for my son, I got them," Mills says. "And I ended up taking everything back, just to get our cash back, so I could pay whatever bills we had."

Even with her partner's salary, losing benefits means Mills and her family are moving in with her parents. To improve her chances of getting a job, Mills planned to get a welding certificate at a nearby trade school. Class starts on Jan. 27, but the $600 payment is due by Jan. 10. Without unemployment checks she doesn't know how she'll pay.

Extra training is one of the things the Emergency Unemployment Compensation program is intended to help with. The money goes to the newly unemployed to help keep them on their feet and in their homes. And usually, there's a little extra to fund the job hunt — things like gas and paying the cellphone bill for interviews.

This For That

States have their own unemployment benefits, but when the recession hit in 2008, Congress passed an emergency extension, paid for by the federal government. NPR's Chris Arnold says that extension has been renewed several times, but that came to an end on Dec. 28, cutting off about 1.3 million Americans.

Most Republicans would consider extending the benefits again, Arnold tells NPR's Arun Rath, but only with concessions from Democrats.

"If you extended the program for another year, the Congressional Budget Office says that would cost about $25 billion, so Republicans want Democrats to agree to cut the budget and find ways to pay for that," he says.

There are a few Republicans who think ending unemployment benefits would encourage people to be more aggressive about looking for work, Arnold says.

But Arnold spoke with a liberal and conservative economist this week who both think having so many people unemployed is bad for the economy. When people with even the fewest resources have money to spend, they can put that back into the economy.

"The White House and some other independent economists have said, look, if we don't extend this, we're going to lose between 200,000 and 300,000 additional jobs just because we're losing that simulative effect," Arnold says.

North Carolina's Case

Just a few days into the cuts, it's hard to tell what the changes will mean for California, or other states likely to be most heavily affected. But there is one case study to look to: North Carolina.

In July, lawmakers there cut the maximum length of benefit down to just 19 weeks – and cut the weekly maximum amount from $535 to $350 Losing one safety net tends to mean searching around for others. Food banks felt the drag almost immediately.

Food bank director Ron Pringle says he's seen about a 17 percent increase in need over this time last year.

"Individuals that are receiving unemployment benefits are sometimes just above the threshold to receive food stamps," he says, "so after those unemployment benefits were cut, then our local [Department of Social Services] officers ... started seeing such an increase in individuals coming and applying for food stamps."

And he sees more pain on the way. He thinks it will be difficult for food banks to keep up with the demand.

"I would really encourage them to begin the conversation now and not wait for the impact to hit, because it's going to hit all at once," Pringle says.

But Wells Fargo economist Mark Vitner says the cut in benefits has been a success in North Carolina: The unemployment rate has dropped significantly.

"The thing that seems to have changed is that some folks who may have passed up on a job because it wasn't all that desirable and didn't pay all that much now seem to be giving those jobs a second look because their extended unemployment benefits have ended," he says.

Better To Be Unemployed?

Vitner says unemployment payments can actually keep people unemployed for longer.

Warren Williams of Murrieta, Calif., has found himself in just that predicament. He was laid off from his door-to-door marketing job back in March. This job hunt has been much tougher than his last.

"When you're 62 years old, a lot of companies don't want to hire you," he says.

Williams lives between San Diego and Los Angeles, about 60 miles from each. But he and his wife share a car, so commuting would be tough and expensive.

His unemployment benefits — just under $600 every two weeks — have allowed him to be selective about a new job.

"I was offered part-time jobs. But ... by the time you paid for gas and all that, you'd make more money not working. So I was only looking for jobs that paid more than what my unemployment was," he says.

Williams is also starting to collect Social Security, which is unavailable to younger people who've lost their jobs, like Vicki Dolenga.

Moved And Still Stuck

After getting laid off four times in four years, 42-year-old Dolenga packed her things in a storage unit and left Los Angeles. Dallas held a promising job opportunity, but it didn't pan out.

Dolenga had to move in with her nearest family member — her mother in Jackson, Miss., a six-hour drive away. It's not at all what she wanted, but it's all she can afford.

Dolenga got her last payment earlier this week, and credit card bills and student loans are looming. She says she has to pay for her cellphone — what if she does get an interview? Even if that dream job in Dallas opened up, she couldn't afford to go.

"I have no money to be able to get to Dallas if I were to get an interview. It's $200 that I literally don't have," she says.

Dolenga and all the other unemployed workers who spoke to NPR this week have been hanging onto Congress' every word, because there is still a chance that these benefits could be renewed. The Senate is expected to vote on a bipartisan bill to extend the benefits as soon as Monday, although passage is not assured in either the Senate, which is controlled by Democrats, or the Republican-controlled House.

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