• By
  • Phil Izzo

Federally funded extended unemployment benefits are scheduled to expire on Nov. 30. Below are some questions and answers about how an expiration will affect the unemployed and the economy.

How long does unemployment insurance last?

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Job seekers may see their unemployment benefits lapse or end entirely.

Earlier this year, Congress approved up to 99 weeks of unemployment benefits backed by the federal government — an addition of 73 weeks to the traditional 26 offered by the states. The duration varies from state to state, based on how bad the unemployment situation is in the region. The federal program that funds the additional 73 weeks is set to expire Nov. 30, following an extension in July. Though the program was extended, the 99-week limit has remained, and most proposals for another extension wouldn’t increase the duration for those who reach the upper limit. It would just keep benefits in place for those unemployed under 99 weeks.

What happens to people currently receiving unemployment if the federal program expires?

There are three main levels to unemployment insurance right now: state benefits, federal emergency unemployment compensation and joint state-federal extended benefits. The basic state benefits are usually 26 weeks and are unaffected by the expiration. When that time is up, the EUC program offers benefits in four tiers. Tier 1 (20 weeks) and tier 2 (14 weeks) are available in all states. Tier 3 (13 weeks) and tier 4 (6 weeks) are only available in states with higher unemployment rates, with 47 states and Washington DC qualifying for tier 3 and 25 states and Washington DC allowed to take part in tier 4. When EUC expires, some states offer extended benefits beyond that point. Once the extension expires on Nov. 30, no new tiered EUC benefits will be offered. If someone currently receives benefits in one of the tiers, the person will continue to be paid for the duration of the term. So, if you’re in week 15 of tier 1, you will get benefits until you reach reach 20 weeks, but at that point you can’t move on to tier 2. Anyone who has reaches the end of a tier’s term after Nov. 30 will either be moved to joint state-federal extended benefits or cut off from receiving benefits. States individually choose whether to offer extended benefits and the duration can be either 13 or 20 weeks. Currently 35 states and Washington DC offer these benefits, but because these extended benefits are currently 100% federally funded, once the funds expire that number will drop. During a lapse in benefits this summer, just 11 states offered extended benefits beyond 26 weeks (See the list of states that offered extended benefits during the previous lapse). The Labor Department expects just 10 states will keep offering extended benefits if Congress doesn’t continue to fund the program. In most states, jobless workers won’t be eligible for any unemployment benefits after 26 weeks.

How many people will the expiration of the federal program affect?

According to the Labor Department 8.7 million people were receiving state or federal unemployment insurance in the week ended Oct. 30. Once the extension of benefits expire, about 800,000 people will begin to fall of the rolls almost immediately and the number will increase as the weeks go by. The Labor Department estimates that nearly two million people will lose their benefits by the end of December.

Will there be another extension?

The answer isn’t clear. In past recessions, unemployment extensions continued until the unemployment rate dropped below 7.5%. That’s a long way from the 9.6% rate recorded in October. Separately, according to an analysis by Goldman Sachs economist Alec Phillips unemployment benefits are extended an average of 23 months after the peak unemployment rate of a recession is hit. The peak unemployment rate for the most recent recession was 10.1% reached on October 2009, 13 months ago. But in past recessions extended benefits began closer to the peak rate. The average amount of time in total that the government offered extended benefits was 29 months over the past three recessions. Extended benefits have been in effect for 28 months in this downturn for the labor market. Meanwhile, Congress remains divided over an extension. Democrat-backed legislation in the House that sought an extension through February was defeated Thursday. Republicans opposed an extension on the grounds it would have added to the deficit, a concern that has grown more prominent since the midterm elections. There are calls for the cost to be offset by making cuts elsewhere or using unspent stimulus funds, moves that Democrats strongly oppose. Even if an agreement is reached, it’s unlikely to come before the expiration of benefits hits on Nov. 30, meaning some people will see at least a temporary lapse in payments.