ARUN RATH, HOST:
This is ALL THINGS CONSIDERED from NPR West. I'm Arun Rath.
Back in November, 222,000 Californians opened their mailboxes to find an unnerving letter. It read: The federal extension of unemployment benefits that you have collected and may still be collecting are scheduled to end at the end of December 2013. It was a warning.
While Congress was inching toward a budget deal, extending Emergency Unemployment Compensation was not a part of that deal. That's the extra government money that allows unemployed workers to collect payments for months longer than they could in better economic times. And sure enough, on December 18th, Congress passed that budget and packed up for Christmas recess, leaving those extended benefits for 1.3 million Americans to expire just 10 days later.
So what happens to the people and families whose payments were cut off? That's our cover story today.
Ruth Mills is 28 years old and lost her job as a construction estimator back in June. She got one of those letters, warning her that benefits could end. Mills couldn't believe the news coming out of Congress.
RUTH MILLS: I followed it every week, and I was just like, did they really just go home?
RATH: After six months of unemployment, she was already scaling back her holiday plans.
MILLS: But a couple little things that my wife asked for for Christmas were very small, and a couple of things for my son that he asked - you know, she asked me to get for my son, I got them. And I ended up, you know, taking everything back, just to get our cash back, so I could pay whatever bills we had.
RATH: The rent is high in San Diego County. Even with her partner's salary, losing benefits meant Ruth Mills and her family are moving in with her parents.
MILLS: No matter what way you do it, you can only stretch $2,000 so far.
RATH: There are usually jobs for an experienced estimator, she says, though it can be hard to find work in the fall. To be safe, Mills decided to get her welding certificate at a nearby trade school. But it's a months long course and the fall session was already full. So she signed up for the spring semester. Class starts on January 27th. But now that her benefits have come to an end, there's a problem.
MILLS: Those classes cost $600 to take. That payment is due next Friday by the 10th or I get dropped from the class. My unemployment was just cut off, so how the heck do I pay for the classes?
RATH: That's the point of unemployment benefits. All states pay newly unemployed workers for around four to six months to help keep them on their feet. And usually, there's a little extra to fund the job hunt, things like gas, paying the cellphone bill for interviews and extra training like in Ruth's case.
But as NPR's Chris Arnold explained to me, it takes people a lot longer to find a job when the economy goes belly up.
CHRIS ARNOLD, BYLINE: When that happens, states have been able often to get the federal government to help, you know, extend benefits a little further. When the great recession hit in 2008, Congress passed a bigger emergency extension of the benefits, and that's totally paid for by the federal government. So up until December 28th, people could get unemployment checks for longer than a year in a lot of states.
RATH: There are a lot of people that are still in bad shape, so what are the arguments in Washington against extending the benefits?
ARNOLD: Right. Most Republicans say, look, we're not totally opposed to this. We'll consider extending benefits. But they want Democrats to make concessions to pay for it. So if you extended the program for another year, the Congressional Budget Office says that would cost about $25 billion. So Republicans want Democrats to agree to cut the budget and find ways to pay for that.
And then there are a few Republicans who say, no, we don't even like that because we think that this enables people to stay out of work longer and not really work that hard to find a job. And if they were taken off the dole, then they'd go out there and be more aggressively looking for work.
RATH: What are the arguments for extending the benefits?
ARNOLD: Well, there's a lot of arguments for extending the benefits. And I talked to a liberal economist and a conservative economist this week. And they both said, look, right now, you've got three times as many people looking for work as there are jobs. So if you cut people off, a lot of them are just going to be unable to find work. There just aren't enough jobs out there.
So they see this in economic terms as it's just bad to have that many people destitute in the economy. There's this human suffering that, of course, you don't want. But it's also just bad for the economy, and that if you put money into people's pockets, especially people with the fewest resources, they have to go out and spend that money. That's stimulative. And the White House and some other independent economists have said, look, if we don't extend this, we're going to lose between 200,000 and 300,000 additional jobs just because we're losing that stimulative effect.
RATH: NPR's Chris Arnold.
Just a few days into the cuts, we can't tell what the changes will mean for California or other states likely to be most heavily affected. But there is one case study to look at: North Carolina.
Back in July, lawmakers there cut the maximum length of benefits all the way down to just 19 weeks, and cut the maximum weekly check from $535 to $350. Losing that safety net sent people searching around for others. One place that felt the drag almost immediately: food banks.
RON PRINGLE: We've seen an average of about 17 percent increase over this time last year.
RATH: Ron Pringle is a food bank director in southeast North Carolina. He says the surge felt by the food banks and the Department of Social Services makes sense.
PRINGLE: Individuals that are receiving unemployment benefits are sometimes just above the threshold to receive food stamps. So after, you know, those unemployment benefits were cut, then our local DSS offices began to reach out because they started seeing such an increase of individuals coming and applying for food stamps.
RATH: So he has a warning for food banks in the other 49 states.
PRINGLE: And there's going to be a rush. It's going to be a surge that we're going to see over the next several months. Keeping that steady flow of product is something that food banks are going to be challenged with. So I would really, you know, encourage them to begin the conversation now and not wait for the impact to hit because it's going to hit all at once.
RATH: As NPR's Chris Arnold explained earlier, most of the money going into homes through long-term unemployment insurance quickly goes right back out into the economy - to local stores, gas stations, landlords and more. But many conservatives aren't swayed by the stimulus argument.
After the benefits were cut off, unemployment in North Carolina did drop dramatically. Conservatives say that's a sign the policy was a success. Wells Fargo economist Mark Vitner explains.
MARK VITNER: People are dropping out of the labor force. That's been an issue in North Carolina. It's been an issue all over the country. But the thing that seems to have changed is that some folks who may have passed up on a job because it wasn't all that desirable and didn't pay all that much now seem to be giving those jobs a second look because their extended unemployment benefits have ended.
RATH: Vitner says it's true that unemployment payments can actually keep people unemployed for longer.
Warren Williams lives in Murrieta, California, about halfway between Los Angeles and San Diego. He was laid off from his door-to-door marketing job back in March. This job hunt has been much tougher than his last.
WARREN WILLIAMS: When you're 62 years old, a lot of companies don't want to hire you.
RATH: Williams says he gets about $600 every two weeks from the government, deposited straight into his checking account. He and his wife share just one car. And since Murrieta is about 60 miles from L.A. or San Diego, commuting would be both tough and expensive. So the unemployment benefits have allowed him to be selective about a new job.
WILLIAMS: Yeah. I mean, I was offered like part-time jobs, but again, it was - by the time you pay for gas and all that, you'd make more money not working. So I was only looking for jobs that paid more than what my unemployment was.
RATH: Even with the insurance expiring, Williams isn't too worried. At 62, he can and has already begun to receive Social Security checks. But dropping out of the workforce often isn't an option, especially for those too young to retire. So where else do you go?
VICKI DOLENGA: I decided that I was going to try and find something in Dallas, Texas.
RATH: After getting laid off four times in four years, 42-year-old Vicki Dolenga packed her things in a storage unit and left Los Angeles. Dallas held a promising job opportunity, but it didn't pan out. Dolenga had to move in with her nearest family member - her mother in Jackson, Mississippi, a six-hour drive from Dallas. It's not at all what she wanted, but it's what she can afford.
DOLENGA: If I were still in California right now renting an apartment, I would be completely stuck. So I do feel like I'm really lucky that I made this decision. And I'm now staying with family, and at least I don't have to worry about, you know, food or a roof over my head.
RATH: Dolenga got her last payment earlier this week, but credit card bills and student loans are looming. And she says she has to pay for her cellphone. What if she does get an interview? And even if that dream job in Dallas opened up...
DOLENGA: I have no money to be able to get to Dallas if I were to get an interview. It's $200 that I literally don't have.
RATH: Vicki Dolenga and all the other unemployed workers we talked to this week were hanging onto Congress' every word, because there is still a chance that these benefits could be renewed. The Senate is expected to vote on a bipartisan bill to extend the benefits as soon as Monday. A similar bill has been introduced in the House, though passage is not assured in either chamber. NPR's Chris Arnold.
ARNOLD: The word from a White House economic adviser was that, look, people need to pay their mortgages and eat, so let's pass this bill right away. It's - the bill's only going to be for a three-month extension, so let's just get this part done, get people their checks, and then we can figure out down the road, are we going to find ways to pay for it? Should we extend it longer? We'll see if Republicans go along with that.
It's also worth mentioning that benefits could be renewed retroactively. So even if it takes a while, people might get that money back in their pockets.
RATH: It's normal for emergency benefits to end when the economy recovers, but long-term unemployment has persisted through this recovery, and Congress has recognized that. The program has been renewed more than 10 times since mid-2008. Not all of those renewals have come on time. Four were at least two days late.
California's next unemployment checks are scheduled to go out just over a week from now. If Congress can pass those bills quickly enough, those Californians and most of the other 1.3 million Americans affected won't experience a delay in their payments.
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