More than 1 million Americans are bracing for a post-Christmas jolt as extended federal unemployment benefits come to a halt this weekend, potentially impacting the recovering economy and setting up a battle when Congress reconvenes.
For families dependent on cash assistance, the end of the federal government's "emergency unemployment compensation" will mean some difficult belt-tightening as enrollees lose their average monthly stipend of $1,166.
Jobless rates could drop, but analysts say the economy may suffer with less money for consumers to spend on everything from clothes to cars. Having let the "emergency" program expire as part of a budget deal, it's unclear if Congress has the appetite to start it anew.
An estimated 1.3 million people will be cut off when the federally funded unemployment payments end Saturday. Across Florida, 73,000 recipients of federal emergency unemployment compensation stand to lose their benefits.
The average Florida benefit is about $230 per week, which is tied to the amount of wages earned over two weeks at a worker’s last job.
An additional 850,000 people nationwide will also lose state unemployment benefits over the next three months.
The federal benefits kick in when state benefits run out after several month. Congress extended or expanded the federal aid to the long-term jobless 11 times. But an extra lifeline wasn't included in the last budget deal.
Liberals blame Republicans for the slashed funding. Fiscal conservatives say there is no justification for extended aid to the jobless with the economy growing and unemployment rates steadily improving.
Started under President George W. Bush, the benefits were designed as a cushion for the millions of U.S. citizens who lost their jobs in a recession and failed to find new ones while receiving state jobless benefits, which in most states expire after six months.
"When Congress comes back to work, their first order of business should be making this right," President Barack Obama said last week at his year-end news conference.
But Obama has no quick fix. He hailed this month's two-year budget agreement as a breakthrough of bipartisan cooperation while his administration works with Democratic allies in the House and Senate to revive an extension of jobless benefits for those unemployed more than six months.
The Obama administration says those payments have kept 11.4 million people out of poverty and benefited almost 17 million children. The cost of them since 2008 has totaled $225 billion.
At the depth of the recession, laid off workers could qualify for up to 99 weeks of benefits, including the initial 26 weeks provided by states. The most recent extension allowed a total of up to 73 weeks, depending on the state.
Restoring up to 47 extra weeks of benefits through 2014 would cost $19 billion, according to the Congressional Budget office.
House Speaker John Boehner spoke with Obama about an extension earlier this month. Boehner and said his caucus would consider the possibility "as long as it's paid for and as long as there are other efforts that will help get our economy moving once again." He said White House has yet to introduce a plan that meets his standards.
For other Republicans, the bar is higher. Many of them look at signs of economic growth and an unemployment rate now down to 7 percent and expected to drop further as evidence the additional weeks of benefits are no longer necessary.
The effect of jobless benefits on the unemployment rates has been fiercely debated for decades. To qualify, people have to be seeking work. Tea partiers such as Sen. Rand Paul of Kentucky argue that the payments aggravate rather than relieve unemployment.
The benefits allow some jobseekers to hold out for higher wages. Without the benefits, they might accept lower-paying jobs, reducing the unemployment rate. Others may be looking for work only to keep the benefits flowing and will drop out of the job market entirely once the checks stop. In theory, that also would push the unemployment rate lower.
The flip side is that the benefits — in addition to alleviating suffering — get spent on consumer goods, stimulating the economy and creating jobs.
Extended unemployment insurance "is really a lifeline to help pay the bills, put food on the table, and put gas in the tank so people can look for work," argued Maurice Emsellem, policy co-director at the left-leaning National Employment Law Project.
Information from the Associated Press was used in this report.
NOTE: If you live in Florida and will be impacted by the federal unemployment benefits expiring, please contact reporter Chris Hopper at Chris.Hopper@baynews9.com.