Roughly 1.3 million Americans, including more than 8,800 Santa Clara County residents, are starting off the New Year on a bleak note after a federal program extending long-term unemployment benefits was shut down Saturday.
With a bipartisan Congressional vote and the stroke of President Barack Obama’s pen, approximately 222,000 Californians – or one in six; the sixth highest in the country – were dumped from government payrolls, ending what had been 37 weeks of jobless benefits that kicked in after the state’s 26-week unemployment insurance exhausted.
“People are already struggling to pay rent, medical and utility bills,” said Vicky Martin, pantry coordinator at St. Joseph’s Family Center in Gilroy, which provides food, assistance in paying rental and utility bills as well as employment services to those in need. “With the loss of unemployment, you’re virtually subjecting them to homelessness.”
Martin says she’s expecting an increased demand in requests for all of St. Joseph’s services until needy members of the community are able to secure gainful employment.
The average person in the U.S. on long-term unemployment benefits was collecting $1,166 per month, just a few hundred dollars above the federal poverty line, according to the National Employment Law Project.
By the end of 2014, an additional 3.6 million Americans will see their federal unemployment benefits capped at 26 weeks, reads a Dec. 6 report from the White House Council of Economic Advisers on the effects of the federal program’s demise.
More than 10 percent of Gilroyans are currently unemployed and looking for work, based on August numbers from the U.S. Bureau of Labor Statistics. In Morgan Hill, the unemployment rate matches the state’s average of 8.7 percent. Both Gilroy and Morgan Hill have higher rates than the county (6.7 percent) national average (7.3 percent).
And when the number of out-of-work job seekers increases, so does homelessness in Santa Clara County, according to the Emergency Housing Consortium LifeBuilders, a Milpitas-based nonprofit that provides shelter housing opportunities and supportive services to people in crisis.
“Any cuts to a safety net-type program like that definitely can impact the numbers of homeless,” said EHC Lifebuilders Communications Manager Claire Wagner. “If they don’t have a personal safety net, then that’s what will happen. There are a lot of people who are just one or two paychecks from losing everything.”
Close to four out of every 1,000 Santa Clara County residents are homeless, according to recent County estimates.
At the height of the recession, federal government extensions granted up to 73 weeks of jobless benefits, and that was on top of 26 weeks of state unemployment insurance. Congress has been reeling in those federal extensions over the last five years, but held off in 2013 when a last-minute agreement capped the program at 37 weeks.
According to Wagner, one EHC Lifebuilders client has expressed worry about becoming homeless again because the job market is still rough – and to top things off, her unemployment benefits are going to run out.
“I have friends who are professionals who have been looking for work for 18 months to two years,” Wagner said. “I’m really concerned about that.”
The job panorama is bleaker for those who have been out of work for a long time, according to the BLS. People who have been unemployed for more than 27 weeks have a 12 percent chance of finding a job within 30 days. And the odds of finding work decrease the longer a job seeker has been outside the workforce.
Close to 18 percent of Californians were unemployed between 2012-2013 but don’t meet the federal definition of unemployment because they’ve given up looking for work, according to the BLS.
“Most people hear on the news that the unemployment rate is dropping and jobs are being created,” said Tammy Brownlow, president of the Gilroy Economic Development Corporation. “But if you get the full picture – including people who have completely dropped out and aren’t even looking anymore because they’ve been unemployed for so long – I don’t think it’s quite as rosy.”
President George W. Bush signed the long-term benefits program into law in 2008, when the nation’s unemployment rate sat at 5.6 percent and the average unemployed American found a job in a little more than 17 weeks. In October, the average out-of-work job seeker only found work in 36 weeks, according to government figures.
And in 2012 alone, according to the Council of Economic Advisors, the federal program kept 2.5 million Americans out of poverty.
“Virtually 25 percent of families in Santa Clara County live on the edge of poverty and we’re seeing a lot of them in South County,” Martin said.
Still, those against the extension of long-term unemployment benefits, including U.S. Sen. Rand Paul, argue that extending unemployment compensation does not serve would-be workers and instead invites them to a perpetual cycle of joblessness.
Cuts to unemployment benefits also highlight Santa Clara County’s high cost of housing, Wagner points out. With a majority, or 62 percent of Gilroy and Morgan Hill residents spending more than a third of their household income on gross rent, cutting the federal program will have devastating impacts for some.
“When you spend more than a third of your income on rent, it’s considered unhealthy financially,” Wagner said. “A lot of people in Santa Clara County, in order to stay in housing, make sacrifices in other areas of their lives – whether it’s choosing between food or medication – even transportation.”
There is still talk that Capitol Hill could revisit the issue next year, however. Lawmakers have introduced six bills to continue jobless benefits from three months to two years after state programs expire.
Unemployment rates
– Gilroy: 10 percent
– Morgan Hill: 8.7 percent
– County: 6.7 percent
– State: 8.7 percent
– National: 7.3 percent
– $1,166: Average amount collected per month by people on long-term unemployment
– 220,0000: Number of Californians who lost their long-term unemployment benefits
– 25 percent: Families in Santa Clara County living on the edge of poverty
– 12 percent: The chance of finding a job within 30 days for people who have been unemployed for more than 27 weeks
Sources: U.S. Bureau of Labor Statistics
