In early 2010, the total number of workers drawing jobless benefits, including extended, emergency and regular payments, reached 12.1 million. That number has since declined to 5.4 million as of Dec. 15.
The extension of the emergency jobless benefits comes as Congress agreed to some tax increases that will slow economic growth. In the agreement ultimately struck by lawmakers on Jan. 1 and signed by President Barack Obama, payroll taxes will return to 6.2 percent from 4.2 percent.
The increase in the levy, used to pay for Social Security benefits, reduces paychecks by $41.67 for someone earning $50,000 who is paid twice a month. The agreement also makes permanent the George W. Bush-era income tax cuts for 99 percent of Americans, while letting them end for top earners.
The tax increases may clip growth in the first quarter to 1.5 percent or less from 3.1 percent in 2012’s third quarter, according to economists at JPMorgan Chase and Bank of America Corp. The expansion will strengthen later in the year as the housing market continues to rebound, they forecast.
“The expiration of the payroll tax will affect a broad range of households,” Treasury Assistant Secretary for Economic Policy Janice Eberly said during a briefing with reporters in Washington on Jan. 4. “For that reason, the agreement also includes support for the unemployed, the extension of the middle-class tax cuts to continue to provide broadly based support for the economy.”
The Standard & Poor’s 500 Index has climbed 2.2 percent so far this year through yesterday as the deal averting the so-called fiscal cliff was struck. Yet the fate of automatic spending cuts that were forestalled by two months remains unresolved, and the U.S. is again nearing the statutory borrowing limit set by the debt ceiling.
The extended benefits program “actually is a very sizable additional support for those who are still looking for a job,” Ellen Hughes-Cromwick, chief economist at Ford Motor Co., based in Dearborn, Michigan, said on a Jan. 3 conference call.
Lance landed his job about three weeks before his regular unemployment checks would have run out.
“If the extensions hadn’t come back again, I would have been living on nothing,” he said.
Such a prospect prompted Lance to get involved with unemployedworkers.com, a website for the National Employment Law Project that advocated for extending the unemployment benefits. He agreed to tell his story to help the 2 million Americans still drawing extended benefits who haven’t been as successful, he said.
“It’s a great feeling to have a job,” said Lance. “I still want to help other unemployed people by doing anything I can do.”