WASHINGTON — The government safety net designed to protect laid-off workers from financial catastrophe is falling short, leaving nearly half the 11.6 million jobless Americans without unemployment benefits.
The shortcomings are fueling the recession as an increasing number of workers fall through the cracks and curtail spending. The trend highlights what economists say is a growing need for a 21st century makeover of a program started during the Great Depression.
Among the key problem areas:
• There are many more part-time workers now than in 1935, but the program covers only those looking for full-time work.
• Many eligible jobless Americans are shut out because states use an outdated system for calculating their income, making it more difficult to meet requirements.
• Unemployment spells increasingly last longer than the usual 26-week jobless benefits program.
Jobless benefits are essentially mini-financial stimulus packages for struggling American families. Helping laid-off breadwinners continue to purchase goods and services until they find new jobs ultimately bolsters the economy and makes further layoffs less likely.
About $27 billion of the economic stimulus package under consideration by Congress would be used to extend jobless benefits, which vary by state but average about $300 a week. That would cover roughly 3 million Americans through the end of 2009, according to the National Employment Law Project, an advocacy group.
The stimulus bill also would provide $7 billion to the states to encourage them to cover part-time workers and more low-wage workers. These changes could extend benefits to 500,000 people, according to the law project.
But more fundamental reforms are needed to address the system’s underlying weaknesses, economists said.
Before the emergency extensions, only about one-third of unemployed Americans were receiving benefits, a level that has declined steadily since coverage was at its peak in 1975.
The proportion of workers covered usually increases during recessions. But the crush of applicants has revealed other problems as well.
High demand and insufficient funding has made it difficult for many unemployment offices to keep up. Last month, online systems for requesting benefits in three states crashed under the crush of claimants. Other states, such as Michigan, have hired more workers to process the claims.
At least a half-dozen states have had to borrow money from the federal government to pay benefits after exhausting their unemployment trust funds.
