Big business is banking record profits now, but for the rest of us this recession isn’t going away anytime soon.
In Snohomish County, one out of 10 workers is unemployed, and that ratio hasn’t changed for the past 12 months. So we should be thinking about how to create jobs, and that doesn’t mean more handouts to the corporate sector. Washington has nearly $4 billion in corporate tax breaks on the books already — but so far they aren’t creating jobs, at least not here.
How do you create jobs? Ironically, by bolstering unemployment insurance. That’s right. Every penny of unemployment insurance gets spent on food, rent, clothing and the other necessities of life. The Department of Labor estimates that every $1 in unemployment insurance puts $2.15 of purchasing power on the street. That money isn’t used to speculate in stock markets around the world, and it isn’t spent in China on new factories that replace U.S. manufacturing. Instead it is spent right here in Washington. Now that’s a job creator.
In Snohomish County, fully 37,000 workers are unemployed. Of these, one out of four did not receive any unemployment benefits. The unemployment insurance system is not seamless, and a lot of workers who should qualify for benefits don’t. And currently, none of the children of unemployed workers are taken into account when benefits are calculated.
The average unemployment benefit is $367 a week. That is equivalent to 56 cents more than the minimum wage. Benefits are not generous — your income is cut in half overnight, right to the cusp of official poverty. And of course, you have lost any employer-paid health coverage you might have had. So add to the grocery bills the COBRA costs for continued health coverage.
Now how about if you just lost your job and you are juggling a toddler and a first grader? About one out of three unemployed workers — 12,000 in Snohomish County — are in this situation. They are the breadwinners for their families, which include kids. Right now, we are effectively saying to them, “Good luck when it comes to the grocery bill!”
Unemployment insurance isn’t much of a cushion. It’s more of an underinflated air mattress that leaks. Most benefits run out after 26 weeks. The federal government has extended benefits in this continuing recession — but still, 1,000 workers in Snohomish County run out of benefits each month. They become “discouraged” workers — unemployed, but not counted as part of the workforce.
The maximum unemployment benefit is no picnic either, at just $570, less than two-thirds of the average weekly wage. The minimum amount is outright starvation: $135. That is $75 below the poverty level for just one person! It is no wonder that the total poverty rate grew to 12.3 percent in the past year; today, one out of six kids in our state lives in poverty.
So state Rep. Mike Sells, D-Everett, with help from Rep. Mary Helen Roberts, D-Edmonds, has been shepherding a bill through the Legislature that takes into account family values, economic reality and job creation all at once.
Sells has a good reason: About 12,000 workers receive unemployment benefits just in his district. But none of them get any help for their kids. His bill, modifying the unemployment insurance program, will add in $15 weekly payments for dependents of unemployed workers, up to a total of $50. Each $15 will put $32.35 into the local economy. All told, these benefits would generate $80 million in economic activity a year, resulting in at least 1,000 new jobs.
You would think this would be a slam dunk. After all, Washington’s unemployment trust fund is the healthiest in the nation, with a balance of almost $2.5 billion. Sells’ legislation reduces unemployment insurance premiums, so businesses save more than $300 million in 2011. The proposed dependent allowance will cost about one-eighth of that, or $37 million a year. And even that is offset by a grant of $98 million from the federal government just for including this benefit in unemployment insurance.
It is a win/win not just for workers, but also for our children, our main street businesses, and our economy.
John Burbank is executive director of the Economic Opportunity Institute. His e-mail address is email@example.com.
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