December 11, 2012 / 9:45 PM / 5 years ago

Thousands of unemployed in Illinois face end of federal aid

WASHINGTON, Dec 11 (Reuters) - About 90,000 people in Illinois will lose federal jobless aid at the end of the month when an emergency assistance program ends, the state’s employment department said on Tuesday.

Currently, people who are laid off can claim benefits from the state for 25 weeks. They then move on to receive payments from a national emergency program started under President George W. Bush that has been extended multiple times under President Barack Obama and has carried a price tag of roughly $520 billion over five years, according to the non-partisan Congressional Budget Office.

The latest extension, though, expires Dec. 29 and across the country a total of about 2 million people will be cut off from the extra federal benefits, unless the U.S. Congress passes a continuation.

Next year about 2,800 individuals in Illinois will finish their round of state benefits each week and will not have access to other government assistance, the Illinois Department of Employment Security, also said. The department estimates that every $1 in unemployment insurance generates $1.63 in economic activity because the dollars are quickly spent at neighborhood businesses.

The National Employment Law Project, which closely monitors unemployment benefits and advocates a federal extension, said on Tuesday that by the end of 2013 only one in four unemployed workers would have some form of jobless aid.

The federal emergency benefits have mostly gone to the long-term unemployed. In November, the 4.8 million people who had been without a job for 27 weeks or more represented 40 percent of the unemployed, according to the Labor Department.

Obama and his fellow Democrats are pushing to extend the assistance, possibly as part of a “fiscal cliff” deal.

Obama’s administration has told the most-powerful Democrat on the House Ways and Means Committee, Sandy Levin, that extending the federal jobless benefits is “a priority,” said a committee staff member. Obama also discussed the possibility in a meeting with bipartisan governors last week.

Meanwhile, Democratic Senators have called for an extension to be included in a “fiscal cliff” agreement, and to pass separate legislation continuing the emergency benefits if Congress and Obama reach an impasse in their budget talks.

Negotiations to avert the “fiscal cliff” of automatic spending cuts and tax increases at the beginning of the year may not reach resolution before Christmas, Senate Majority Leader Harry Reid said on Tuesday.

The CBO found extending the benefits for a year would cost the U.S. government $30 billion. Accompanying economic activity would push the U.S. gross domestic product up by 0.2 percent and add 300,000 jobs, it said.

Along with Illinois, many other states, including California, Michigan and Washington, are warning those currently receiving federal emergency aid they will soon be cut off.

Illinois has been adding jobs since January 2010, but the demand for employment assistance is still 38 percent higher than before the recession, IDES spokesman Greg Rivara said. The department, which is facing budget cuts of its own, is hoping to tap into the sense of urgency from the end of the federal program to match more people with jobs, he added.

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