Just as Hawaii’s recession-weary economy is turning the corner on rising unemployment, the state’s jobless have been dealt another setback.
An estimated 6,000 Hawaii workers lost their jobless benefits in June as a result of Congress’ decision not to extend an emergency unemployment insurance program, according to estimates from the state Department of Labor and Industrial Relations. And another 2,150 are expected to lose their benefits each month lawmakers fail to fund the program.
The loss of unemployment checks for thousands of Hawaii workers will ripple throughout the state’s economy as benefit recipients no longer have money in their pockets to spend at businesses such as grocery stores and gas stations, economists say.
Unemployment benefits in Hawaii are calculated as a share of a worker’s salary at their last job, up to a maximum of $559 a week, and can last up to 26 weeks.
The federal Emergency Unemployment Compensation program launched in June 2008 six months after the recession began was designed to provide additional assistance to those who had exhausted their jobless benefits. Congress approved several extensions that stretched the term of state and federal jobless benefits to 99 weeks in the hardest-hit states. In Hawaii the combined benefits were capped at 73 weeks.
The House of Representatives approved an extension of the emergency benefits last month, but the measure has been held up in the Senate by Republicans who have said the spending will put too much strain on the federal deficit.
The Senate could take up a measure as early as tomorrow to restore the extended benefits, right after a new Democratic senator from West Virginia is sworn in, Senate Majority Leader Harry Reid said last week.
With the death of Sen. Robert Byrd, Senate Democrats had been a vote short of the 60 needed to overcome a GOP filibuster. West Virginia’s governor named a temporary replacement on Friday to fill Byrd’s seat.
Hawaii’s job market was among the nation’s strongest before the recession with unemployment averaging 2.6 percent a month and just over 1,100 people each week filing first-time claims for jobless benefits in 2007. By 2009, with the recession in full swing, the situation had changed dramatically. The unemployment rate more than doubled to 6.8 percent, and the number of people lining up to collect unemployment checks for the first time had soared to 2,500 each week.
As of June there were about 15,000 workers in Hawaii who had been unemployed longer than 26 weeks and 2,100 who had been out of work for at least 99 weeks, according to Census Bureau data compiled by Lawrence "Bill" Boyd, an economist at the Center for Labor Education and Research at the University of Hawaii-West Oahu.
"This is precisely the sort of situation unemployment insurance envisions, a deep recession and big layoffs," Boyd said.
He said suggestions by some conservatives in Congress that renewing the emergency benefits would be harmful to the federal deficit are exaggerated.
"The argument that it will significantly inflate the deficit is laughable. Spending on extended unemployment benefits would add 0.002 percent to the deficit," he said. "The decline in tax revenue as a result of the recession itself is having the biggest impact on the deficit, not spending on stimulus."
Another point of contention that has been raised in the congressional debate over funding the program is what impact extended benefits have on a job-seeker’s drive to find work.
Jon Kyl, a Republican senator from Arizona, has been a vocal critic of the extended benefits program. Arizona’s maximum unemployment benefit of $240 a week is the second lowest in the country.
"That doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work," he said in the Senate recently. "I’m sure most of them would like work and probably have tried to seek it, but you can’t argue that it’s a job enhancer. If anything, as I said, it’s a disincentive."
Boyd countered that if the economy were at or near full employment, the argument might have some merit.
"We have long-term unemployment because jobs are not being produced and we’re having heavy layoffs. Getting a thousand dollars a month for being on unemployment is not an incentive to stay out of work," he said.
Although Hawaii’s $559 weekly maximum payment for unemployment is the nation’s sixth highest, the cost of living here is also steep.
A report by ECA International published late last year ranked Honolulu as the second most expensive place to live in the U.S. after Manhattan.
The study looked at prices for a basket of goods and services that included groceries, clothing, meals out, drink and tobacco, and miscellaneous goods and services.
HOW TO QUALIFY FOR BENEFITS
State unemployment benefits are paid from an insurance pool funded by employer contributions. Employees do not pay any part of their wages to finance the program.
To tap the fund, you first must be determined to be unemployed through no fault of your own as defined by state law. The state requires workers to establish a valid unemployment claim by meeting a monetary qualification. You must have been paid "sufficient wages" in your base employment period, which is roughly the year preceding the starting date of your claim.
To qualify, recipients must be either totally unemployed or working less than their normal hours and earning less than their weekly benefit amount. Recipients can earn up to $150 a week and still receive their full unemployment check.
For more details go to hawaii.gov/labor/ui and click on "frequently asked questions."
JOBLESS COMPENSATION BY STATE
Maximum weekly unemployment benefits (not including dependent allowance):