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Blacks in the South and Midwest Hurt Most by Jobless Cuts
Published:
9/3/2014 4:13:38 PM


AP Photo
 
By Freddie Allen


WASHINGTON (NNPA) – When cash-strapped states in the South and Midwest slashed unemployment benefits after the Great Recession, claiming it was an effort to save money and boost the economy, they only succeeded in disproportionately hurting Black families already struggling to make ends meet.

In a recent analysis of the impact of state cuts to jobless benefits, the Economic Policy Institute reported that Arkansas, Florida, Georgia, Illinois, Michigan, Missouri, North Carolina and South Carolina decreased the total number of weeks that the unemployed could receive benefits to below 26 weeks, even though no other state had dipped below that mark in more than decade.

When Congress approved the Emergency Unemployment Compensation program in 2008, the overall employment rate was 5.6 percent and the long-term unemployment rate was 1percent. But when Congress let the program expire in 2013, the jobless rate and the long-term unemployment rate were much higher; 6.7 percent and 2.5 percent, respectively.

The unemployment rate for Blacks was nearly 12 percent (11.9 percent) in December 2013, nearly twice the national average. The eight states, primarily in the South and Midwest, moved ahead of Congress and cut the number of weeks that people could receive unemployment benefits citing the need to “shore up insolvent state accounts in the federal Unemployment Trust Fund (UTF).”

Not only were UTFs in 27 other states also insolvent, the states that made the cuts experienced little to no benefits in their economy or labor force rates.

“The fact that you don’t see any significant effects of the cuts, positive or negative, was surprising to me,” said Valerie Wilson, an economist and director of the Economic Policy Institute’s Program on Race, Ethnicity, and the Economy (PREE) at the Economic Policy Institute.

Wilson said that states that made the cuts didn’t gain any labor market improvement, aside from what was already happening, and on the budget side, they didn’t save a lot of money either.

“The justification for doing it was really weak,” said Wilson. “It makes a point that those decisions were made not necessarily for economic reasons, as much as they were politically driven.”

Wilson said that, on the other hand, the loss of income from the jobless benefits was disproportionately borne by African American workers, because in those states where those benefit cuts were made, African Americans are a larger share of the workforce than their overall population.

In Georgia, Blacks accounted for roughly 31 percent of the labor force and 58.3 percent of the long-term unemployed, compared to Whites who accounted for about 56 percent of the workforce and 35 percent of the long-term unemployed.

Even Missouri, where Blacks were only 10 percent of the labor force, they were 18.3 percent of the long-term unemployed, compared to Whites who made up more than 83 percent of the labor force and about 73 percent of the long-term unemployed.

In a July 2013 report, the Urban Institute said that Blacks represented 10.5 percent of workers that held jobs and 22.6 percent of the long-term unemployed, nationwide.

Some state lawmakers have argued that extending unemployment insurance (UI) creates a class of citizens who would rather depend on the government than search for gainful employment.

The EPI report offered empirical evidence that proved otherwise, including 2011 research by Jesse Rothstein at the Goldman School of Public Policy and Department of Economics University of California that showed that “most of the effect of UI extensions on unemployment stems not from any barrier to job-finding introduced by these extensions, but from the inducement to workers to remain in active job-search, which means that they will be classified as unemployed rather than out of the labor force. UI extensions that keep workers engaged in active job-search not only do not harm job-finding rates, they may actually increase them by boosting workers’ job search intensity.”
 

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