Georgians have received more than $2 billion in federal Unemployment Insurance (UI) benefits over the last 12 months as part of the emergency UI program. To put that economic impact in context -- $2 billion is greater than the annual payroll for Robins Air Force Base. If Congress does not extend these benefits in December, millions of dollars will immediately stop flowing to Georgians pockets, lowering their purchasing power and impacting local economies across the state.
Congress provides emergency UI benefits in recessions to assist workers during periods of prolonged unemployment after they exhaust state UI benefits. These benefits help workers and families make ends meet when the number of job-searchers greatly out-numbers available jobs. For every 1 job opening nationally there are 5 unemployed workers. The job-population mismatch is especially pronounced in Georgia -- Today, Georgia has fewer jobs than in 2000, yet 20 percent more working age adults.
How would state leaders respond if a company with $2 billion in annual payroll suddenly announced they were eliminating all payroll in 2011? This is the dire reality faced by Georgia workers if federal UI benefits expire. An estimated 90,000 Georgians will lose benefits in December unless Congress acts, according to the National Employment Law Project.
Emergency UI Benefits Typical Until Unemployment Drops to 7.2%
Federal emergency benefits have been available in recessions since the 1950s and historically remain in place until unemployment falls to 7.2 percent or lower. Almost one in ten workers is unemployed today (9.6 percent nationally and 9.9 percent in Georgia), yet these emergency benefits are set to expire. Georgia's unemployment rate will likely stay above 9 percent in 2011, according to GSU Economic Forecasting Center.
Federal UI Benefits Have Helped Workers...And the State Budget
Georgia workers receiving federal UI benefits have contributed an estimated $100 million in income tax revenue over the last 12 months. UI benefits act as wage replacements for unemployed workers as they search for a job, and Georgia treats those benefits like regular wages when it comes to taxes. As the state has struggled with falling revenues and rising need, these tax contributions have added a small boost to revenues.
While the debate about UI extensions should focus on the very real impacts to workers and families, we at the state-level should also consider the impacts on state budget and tax policy. If emergency UI benefits expire and unemployment remains at 9 percent, as expected, will state leaders have to fill an additional $100 million hole in FY 2012 on top of the $1.8 to $2 billion budget shortfall? Will the demand for state services increase as these workers lose benefits -- at the same time revenues remain low? Is the state prepared to meet those additional demands for services?
The expiration of federal UI benefits has consequences for workers, families, and local economies, as well as the state's ability to meet rising needs for services.