No Agreement on EUC Extension – Impact may be positive on unemployment rate and employment numbers

Despite calls from the President and a grass roots campaign over the Congressional break to urge the Senate to pass an EUC extension, Majority Leader Reid has concluded that there are not 60 votes for a version of a bill that would further extend emergency unemployment compensation after the week ending December 28th. Although there was considerable discussion about alternatives proposed by members of a six Republican group (Collins, Heller, Portman, Murkowski, Coats, Ayotte) looking for a way to pay for an extension, the Senate majority found none of the Republican alternatives to be acceptable and continued to press for an extension without a pay for. The result is that there will be no agreement or passage by the Senate of an EUC extension in the foreseeable future, and even if there were the House is very unlikely to pass it.

President Obama may continue to urge an extension of EUC in his State of the Union speech and it may be included as a campaign issue in some Senate races in 2014, but the time to actually pass an extension appears to be over.

With the ending of EUC, states will likely see a drop in the total unemployment rate in the coming months as individuals who continued to consider themselves to be in the workforce for purposes of claiming EUC will now officially choose to drop out of the workforce or take jobs that are available. This effect was observed most recently in a case study performed by researchers at the University of Pennsylvania. Their review of the North Carolina experience concluded that the ending of North Carolina’s EUC program since June 30, 2013 contributed to a reduction in the total unemployment rate and an increase in the number of jobs created in that state. See the link at http://economics.sas.upenn.edu/~mitmanke/NC_Case_Study.pdf

The administrative impact of the ending of EUC will be to avoid the complexity that would likely have come with a retroactive extension with a fresh set of EUC tier levels and new dates to bring up and bring down the program. Individuals who have continued to file EUC weekly claims in hopes that it would be extended should be advised of the program ending and that they may, however, file for regular state UI benefits if they continue to be unemployed and have base period wages sufficient to qualify.

There should be a renewed focus on job search and reemployment at the earliest stage of unemployment. There should also be appropriate assessment, training and referral of individuals who are longer term unemployed to the array of workforce programs that are available.

For employers in some industries it may also mean that a larger population of unemployed workers will be more likely to accept jobs, improving the overall pool of serious applicants. A growing economy also provides opportunities for on the job training, employer customized training programs, apprenticeship and programs requiring skills certifications.

The shift from post-recession high claims to economic recovery and job creation is something that calls for a shift in policy emphasis at the national and state level.

UWC’s National Foundation for Unemployment Compensation and Workers’ Compensation will address the impact of the ending of EUC, and an array of UI tax, benefits and administrative issues at its 33rd National UI Issues conference scheduled for June 18-20 at the Savannah Marriott Riverfront Hotel.