Retroactive Unemployment Checks Are Cold Comfort to Some

Making a renewal of federal unemployment benefits retroactive to late December will help millions – but increasingly, many jobless are facing harm that a government check cannot undo.

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The Fiscal Times
March 19, 2014

Congress will return to Washington next week, nearly three months after allowing a federal extension of state unemployment benefits to expire, and the Senate will consider a bill that would renew the extension for five months – three of which would be retroactive.

The 3.8 million long-term jobless and those who advocate for them say that they would welcome the financial relief that a lump-sum replacement of the benefits that they lost after the extension expired would provide. However, in many cases, the delay has done damage that no check from Washington can undo.

Related: Dems Try a New Ploy to Extend Unemployment Insurance

“After you go over the dam, giving you a new boat doesn’t really help,” said Doug Perschbacher, a chemical engineer who lost his management job when the Fortune 500 company he worked for restructured last year.

Perschbacher, of Raleigh, NC, said that he has been logging hundreds of miles per week in his car, driving to networking events, meetings, and otherwise trying to find a new job. But to do so, he has been draining his 401(k) retirement account – while paying a 10 percent penalty for early withdrawals – and sacrificing his future financial security.

Like hundreds of thousands of the several million long-term unemployed in the U.S., Perschbacher never received any of the extended benefits that people who became unemployed not long before him were eligible for. The federal benefits were cut off before he exhausted his state benefits, meaning that unlike people in similar situations who received as much as 99 weeks of unemployment insurance during the height of the great recession, Perschbacher got less than half a year. (As a North Carolina resident, Perschbacher is particularly disadvantaged, because state-level policies further restricted the ability of citizens to collect jobless benefits.)

The fact that he has a 401(k) to rely on makes Perschbacher luckier than many others. If he didn’t have that resource, he said, he’d be in an even worse position.

Related: Senate Reaches Deal to Extend Unemployment Insurance

“Once you don’t have gas money, you wind up being homebound,” he said, adding that the inability to go out and talk to people is fatal to a job search.

Mitchell Hirsch, an unemployed worker advocate with the National Employment Law Project, said that his group welcomes the decision to make benefits retroactive. “It would certainly go a long way to forestall more bad consequences for other people,” he said.

However, he noted, “It’s important to recognize that even before these benefits were cut off for jobless folks who were out of work for six months or more, these people were already in precarious financial circumstances.”

With the extended benefits, he said, they were in many cases able to keep making rent or mortgage payments, keep current on car insurance, and other bills essential to preserving their ability to keep up a job search, even as they fell behind on phone bills, utilities and other expenses.

Related: Dems Move to Force Unemployment Vote

“Once these benefits were yanked away, then their ability to maintain any of those payments was virtually eliminated,” said Hirsch. “People are not just facing foreclosures on their homes but in many cases where people are renters they are getting eviction notices.”

A lump sum retroactive payment will provide “critical relief” from immediate crises, he said, “but once the damage is done, people’s credit remains harmed for quite a long time and in some cases employers use credit reports as pre-employment screening, and it just makes it that much harder to get back to work.”

And getting back to work is no small task these days. At forum on economic growth held in Washington on Tuesday, Rep. Chris Van Hollen, ranking Democrat on the House Budget Committee, noted that there are at least three times as many unemployed people in the U.S. as there are open jobs.

The bad news for the long-term unemployed hoping for a federal extension is that even if the current five-month proposal passes the Senate, it’s prospects in the House of Representatives remain dubious. Speaker John Boehner (R-OH) has been notably unenthusiastic about the proposals being debated in the Senate.

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A longtime reporter on the intersection of the federal government and the private sector, Rob Garver is National Correspondent, based in Washington, D.C. He has written for ProPublica, The New York Times and other publications.