[Hpn] Out of Work, and Out of the Benefits Loop
Wed, 17 Oct 2001 09:45:58 -0700
October 17, 2001
Out of Work, and Out of the Benefits Loop
By DAVID LEONHARDT
When Larry Johnson applied for unemployment benefits the week after the
World Trade Center collapsed, he seemed like just the kind of person
government officials have been talking about helping since Sept. 11.
Mr. Johnson, 49, worked the night shift, cleaning the bar and buffing
floors, at Windows on the World, the restaurant at the top of the north
tower. The terrorist attacks, two hours after Mr. Johnson had left work,
killed 79 colleagues and took away his job eight months after he had started
But a couple of weeks ago, he received a letter from New York State
rejecting his application for benefits because he had not earned enough
money over the previous 18 months. That technicality is one of the many
restrictions in an unemployment system that now pays benefits to about 39
percent of all Americans who are without a job and looking for one, down
from about 50 percent in 1975 and even higher levels a half- century ago,
according to the Labor Department.
As the labor force has changed over the last three decades to include more
women, more temporary employees and fewer factory workers, the unemployment
insurance system has not changed with it in many states and has become
considerably stricter in many others, job counselors and economists said.
The system, created in 1935 as part of the Social Security Act, pays an
average of $230 a week to unemployed Americans who meet its qualifications.
Although the rules vary from state to state, they typically exclude people
who do not fit the traditional notion of a laid-off worker ‹ part-time
employees, recently hired low-wage workers and people who quit their jobs or
refused a new shift for family reasons.
As a result, because millions of unemployed workers will not qualify for
benefits in the first place, many laid-off employees will not be helped by
President Bush's proposal to extend payments to a limited pool of those
jobless Americans who are eligible.
With the United States probably in its first recession in a decade and
companies announcing tens of thousands of layoffs, the gaps in the
unemployment safety net could aggravate the downturn, economists say. People
without jobs or unemployment benefits ‹ even people whose spouses work ‹ are
likely to cut their discretionary spending sharply, as many struggle to pay
their rent, meet their debt payments and still have enough money for food
"I've got to start all over again," said Mr. Johnson, who described himself
as running out of the money he had received from his sister and a few
charities. "I'm on the edge of being homeless."
Mr. Johnson was turned down because New York, like most states, determines
eligibility based on earnings over a 12-month period that ends a few months
before the date a job is lost. This is supposed to give the state time to
gather employment records, but it often excludes people who have worked for
less than a year and were previously without a job.
New York is one of nine states that let people like Mr. Johnson reapply and
ask that the most recent months be considered, said Betsy McCormack, a
spokeswoman for the state labor department. With each rejection letter, the
state includes a form allowing people to make the request.
In addition, Ms. McCormack said, Gov. George E. Pataki has taken steps to
help people left jobless because of the attacks, like extending until next
month the deadline to apply for disaster-related unemployment benefits.
Still, Mr. Johnson's unexpected rejection, and the difficulties it has
caused, is typical of the effect that an increasingly complicated set of
rules has had, job counselors said.
"This is a system that defies explanation in so many ways," said Jeffrey B.
Wenger, an economist at the Economic Policy Institute, a research group in
Washington partly supported by labor unions.
Full-time employees who worked for at least a year before losing their jobs
rarely fail to qualify for benefits because of income minimums; most states
require people to have earned only a few thousand dollars to be eligible.
But people are rejected for many other reasons. Some are turned down because
they quit their jobs to care for relatives, leaving them ineligible for
benefits once they begin looking for work again. Or because they worked part
time and made the minimum wage or slightly above, leaving them short of the
income requirements in some states. Or because, like many parents of
children, they worked part time before being laid off and are again seeking
only part- time work.
"There is a big discrimination against part-time people," said Richard B.
Freeman, a labor economist at Harvard University. Like full-time employees,
part-time workers pay unemployment-insurance tax while they are working, but
in most states they do not receive the benefits of that tax when they are
"It's not right," Mr. Freeman said.
Other people, meanwhile, never receive benefits because they do not think it
is worth applying or because they do not know they qualify, labor experts
A report submitted to Congress last year by the General Accounting Office
attributed the long-term decline in unemployment insurance coverage to
several economic and political reasons. In past decades, more Americans
worked in factories, where regular layoffs made jobless benefits a common
part of their lives, and belonged to labor unions, which often reminded
members to apply for benefits.
In the 1990's, more states eased eligibility rules than tightened them, Mr.
Wenger said, helping the percentage of jobless workers getting benefits to
The General Accounting Office report recommended a more significant
loosening of the rules so that unemployment insurance could catch up to the
changes in the work force. The report noted, for instance, that over the
last five decades many states have begun rejecting people who had quit their
jobs for personal reasons even as the percentage of families with two
working parents rose sharply.
The report also said unemployment insurance had become particularly
important because of the number of low-wage workers who have entered the
work force since the welfare system was overhauled in 1996.
But proposals to expand unemployment insurance have won little political
support because they cost money and could give people less incentive to find
a job, economists say. In fact, Mr. Freeman said, Australia and many
European countries, while still more generous, have reduced their benefits
in recent years, making their systems more like that of the United States.
This month, President Bush proposed extending benefits by 13 weeks for
people who became unemployed after Sept. 11, who live in states where the
unemployment rate rises by at least 30 percent and whose benefits expire.
Most states normally allow people to collect for as long as 26 weeks.
The president also asked Congress to give states $3 billion in emergency
funds, some of which could be paid to unemployed workers enrolled in job-
training classes who are not normally eligible.
Still, with the country entering its first recession since 1991, economists
said they were worried that the system's gaps could contribute to a delay in
"If you want to put money into the economy, put it in the hands of people
who are the most desperate," said Richard J. DeKaser, the chief economist at
the National City Corporation (news/quote), a bank based in Cleveland.
"People who are unemployed are not going to save money."
If anything, many without jobs and unemployment benefits find themselves
dipping into their savings or cutting back on their spending.
Marjorie Goldstein, who joined US Airways as a flight attendant in March
after spending 15 years at home raising three children, lost her job late
last month as part of the airline industry's huge cutbacks after the
attacks. When she applied for unemployment, Pennsylvania rejected her and
many of the people with whom she went to flight attendant school earlier
this year, saying their work experience was too recent.
"If I were the major breadwinner, we'd be hungry," said Ms. Goldstein, who
lives near Pittsburgh.
Because her husband works, she is not worried about paying the essential
bills. But with her $1,700 in additional monthly income, the family had
bought a new stove, refinished its driveway and paid for day camp for one of
the children. Now, she said, they are likely to cut back.
Copyright 2001 The New York Times Company
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