More than 20,000 Connecticut residents are expected to lose unemployment payments at the end of the month if Congress does not pass legislation to extend federal assistance, according to the Labor Department.
The Emergency Unemployment Compensation program passed in 2008 is set to expire at the end of December. When that happens, about 1.3 million people around the country will lose benefits, according to a Thursday report by the White House and the U.S. Labor Department.
Here in Connecticut, inaction by Congress could mean that between 20,000 and 22,000 unemployed residents will claim their last benefit payment on Dec. 28, three days after Christmas.
That’s according projections from the state Labor Department. The termination of the emergency benefits won’t impact everyone on unemployment in Connecticut. The EUC program only applies to residents who have exhausted the 26 weeks of traditional unemployment insurance and have begun collecting federal benefits.
However, the program will end without being phased out. That means that even if a resident only collected a week or two of emergency benefits, payments will still be cut off at the end of the month.
“To give you a sense of the magnitude . . . a third of the people receiving [unemployment benefits] would all of the sudden receive their last check at the end of December,” said Betsey Stevenson, a member of the Council of Economic Advisers, on a conference call with reporters Thursday.
Stevenson was referring to nationwide figures. In Connecticut, the EUC program makes up more than a third of the total population receiving unemployment benefits. As of the end of November, about 69,400 people in Connecticut were collecting unemployment, and about 25,700 of those residents were doing so under the EUC program. According to the White House report, about 330,000 people have used EUC benefits in the state since 2008.
“This is obviously devastating for individual families who are trying to put food on the table,” she said.
During the Thursday conference call, Stevenson stressed the potential damage cutting off benefits to thousands could have on the economy.
“It’s actually a crucial program for our economy because when these families are cash-strapped who don’t have access to credit are forced to simply stop spending because they don’t have money, their reduction in spending hurts all of us,” she said.
The report predicts that the drop in economic activity would have consequences with regard to job creation. The White House report estimates that extending the benefits until the end of 2014 would save about 5,800 jobs in Connecticut.
The report urges Congress to extend the benefits before their holiday recess. Andrew Doba, a spokesman for Gov. Dannel P. Malloy, said the expiring program is a problem lawmakers in Washington need to address, “and soon.”
“Obviously it’s a concern. While the economy is improving, losing unemployment benefits is a scary proposition at any point. The Department of Labor is reaching out to everyone that is being affected to inform them of the different job placement services that are available to them,” Doba said in an email.