An estimated 2,500 Clark County residents received a 21 percent reduction to their federal unemployment benefits over the weekend, demonstrating one more way across-the-board federal spending cuts could slow Clark County’s economic growth, a regional economist says.
The federal cuts, known as “budget sequestration,” hit those collecting money through the federal Emergency Unemployment Compensation program. Prior to sequestration, those receiving the emergency unemployment assistance received a benefit ranging from $143 a week to $608 a week, depending on their circumstances. The cut reduces that range to between $112 and $480 a week, said Scott Bailey, regional economist with the Washington Employment Security Department.
In Washington, residents can collect up to 26 weeks of unemployment on the regular program. In response to the economic recession, the federal government in late 2008 created the Emergency Unemployment Compensation program to provide additional unemployment benefits beyond that. Those federal benefits are the ones that were cut.
Those hit by the federal unemployment cuts represent a segment of the population that’s on the verge of slipping into poverty, Bailey said.
The cuts to their benefits have two main impacts: “It certainly is going to affect roughly 2,500 households, who are probably many of them close to the edge because of long-term employment. That’s the first concern is those individuals and their families,” Bailey said.
“Secondly, those folks have less to spend,” Bailey said. “It impacts the food budget. People have to pay rent and utilities. It just forces some really tough choices.”
Bailey said those 2,500 people might not have “a huge impact on the economy overall,” but when you add them to all the other people hit by the broad federal cuts, the economic consequences are measurable.
“A lot of small cuts do add up,” he said.
40,000 hit statewide
Statewide, the federal unemployment assistance cuts will impact an estimated 40,000 people. Those federal benefits can last up to 37 weeks, and unless the program is renewed, those federal unemployment benefits are set to expire at the end of the year.
The sequestration, which cuts $85 billion this fiscal year and nearly $1 trillion during the next decade, was established after members of Congress, tasked with reducing federal spending, couldn’t agree on a more delicate way to shrink the budget.
The automatic cuts will reduce annualized growth this year by 0.6 percentage point, according to the Congressional Budget Office. By the end of 2013, the budget office estimates, the cuts will decrease employment in the U.S. by roughly 750,000 full-time jobs.
The precise impacts of sequestration on Clark County’s economy aren’t entirely clear.
Bailey said it’s difficult to get a handle on how sequestration will play out locally. Nevertheless, he said, a slowdown at the national level will trickle down to Clark County.
“Slowing the national economy by 0.6 (percentage point) is significant,” Bailey said.
Referring to sequestration, the Federal Open Market Committee — the monetary policymaking arm of the U.S. central banking system — said earlier this month that “fiscal policy is restraining economic growth.”
