Almost 1.3 million Americans will lose the federal government's "emergency unemployment compensation" monthly stipend of $1,166 beginning this Saturday, meaning a drop in the economy and a closing of consumer wallets may be underway, according to the Associated Press.
Any families who are currently receiving money from the government for unemployment will be losing their monthly stipend, the AP reported. According to analysts, jobless rates could drop and there will be less money circulating in some of the hardest hit communities of the recession.
Congress let the unemployment program end as part of the recently passed budget deal, and though some Congress members have plans on extending the program, there is no current certainty on the subject, according to the AP.
The program began under President George W. Bush and was created to aid Americans who lost their jobs during the recession and were having difficulty in finding new ones while receiving state unemployment, the AP reported.
State unemployment programs usually end after six months, and the program was designed to be a "cushion," according to the AP. The program allowed the unemployed to apply for 99 weeks of benefits, beside the time given by the state.
What the benefits allow is for laid off recession workers to hold out for a higher paying job instead of accepting a lower paying position, according to the AP. The removal of the program could mean the jobless rate will lower because workers will take the lower paying jobs.
When the unemployment programs shut down, 214,000 people from California will lose their stipend, 127,000 New Yorkers will lose theirs and 90,000 people in New Jersey will be cut off, too, according to the AP.
Last year, unemployment aid totalled $4.5 billion in federal benefits, most of which was put back into the economy, according to the AP.
The Obama administration said 11.4 million people have been helped and removed from poverty due to the program, with nearly 17 million children benefiting as well, the AP reported. Since 2008, the total cost of the unemployment program is $225 billion.
"When Congress comes back to work, their first order of business should be making this right," President Barack Obama said during the year-end news conference, according to the AP.
If the government were to allow an additional 47 weeks through 2014, it would cost $19 billion, according to the Congressional Budget office, the AP reported.
After speaking to Obama, House Speaker John Boehner said the caucus would consider an extension to the program "as long as it's paid for and as long as there are other efforts that will help get our economy moving once again," the AP reported.
Maurice Emsellem, the policy co-director at the National Employment Law Project hopes the program will be extended into 2014 who insists the program "is really a lifeline to help pay the bills, put food on the table, and put gas in the tank so people can look for work," the AP reported.
