Congress extends, but cuts, unemployment benefits

Drug Test

A pre-employment drug screening could now be a pre-unemployment screening. Image: Flickr / fstorr / CC-BY-SA

Congress has recently signed off on a financial compromise bill that will extend several federal programs. Unemployment compensation, however, will be cut in some states.

The extension of federal programs

According to the compromise that has been passed by both the House and Senate, the cut in payroll taxes known as the payroll tax holiday will be continuing. This cut takes out 2 percent of the payroll tax on each paycheck and is capped at $2,200 per worker. On average, this cut adds an additional $20 per paycheck for most workers. The bill also heads off a change to medicare reimbursements, which would have cut the payments doctors received for their Medicare patients.

Changes coming to unemployment

As a part of the compromise bill, the portion of unemployment insurance funded by the U.S. government will be changing significantly. Currently, unemployment insurance benefits are limited to 99 weeks total in some states. States with lower unemployment rates are limited to 93 weeks total. On a gradual basis, the maximum available benefits will be reduced depending on the state’s unemployment rates. States with high unemployment rates will be limited to no more than 73 weeks of unemployment benefits. States with low unemployment rates will be limited to 63 weeks of benefits.

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Drug testing will be allowed

One of the most controversial changes to the unemployment system is the allowance for drug testing. If a person lost a job for failing a drug test or refusing a drug test, the state will be allowed to drug test the individual, and a failing test could disqualify the recipient from receiving benefits. Drug tests will also be allowed for anyone looking for work in an industry that carries out drug testing as a standard policy, which in 2007 was nearly 85 percent of all jobs.

Cost of the changes

Taken all together, the changes to unemployment benefits, Medicare payments and payroll tax cuts are expected to cost $119 billion. Currently, the amount will be added on to the federal deficit, though some of the costs will be offset by spending cuts in other places. The bill has passed both the House (293-132) and the Senate (60-36), and President Obama has committed to signing the bill. Some House and Senate lawmakers have said that they felt shut out of negotiations and are not pleased with the final compromise bill. Some Congressional lawmakers were asking for the costs of the bill to be offset with cuts elsewhere or increases in tax collections.


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