The Washington Post reports that, according to U. S. Department of Labor statistics, an estimated 2 million people will have been dropped from the rolls of unemployment benefits recipients by the time the Senate returns from their July 4th recess (July 14th), which is the soonest some believe they will consider debating the unemployment extension provision.
There is a considerable amount of collateral damage that comes when 2 million people lose — or partially lose — their incomes. CNN reported that it is estimated that more than a million people have already lost their benefits throughout the month of June. Those recipients would have been covered by legislation passed retroactively, whether it passed as a piece of standalone legislation or as part of the massive American Jobs and Tax Loopholes Act of 2010. In the debate over whether or not unemployment benefits should be extended, it is the collateral damage that is least considered. But, when it is, collateral damage usually only extends to the family and/or dependents of the individual who lost his benefits. But the ripple effect of the loss of income extends further than just the recipient and his dependents — much further.
When considering the recipient as an integral piece of an interlocking economy, the loss of income — even just a portion of it — can be disastrous, not just for the individual whose options have now become more limited, but others who depend upon the individual for payment for goods and services. Collateral damage can extend to a great many different entities. The recipient will have to make choices, some or all of which can have short- and long-term effects on the recipient’s lifestyle.
For example, if the recipient must make a choice between paying rent or a mortgage, and making a monthly car payment, the individual might choose the car payment (for medical reasons, a part-time job, etc.). In this instance, the landlord or mortgage holder is hurt via non-payment. Conversely, the lien-holder on the vehicle is hurt if the recipient chooses to pay his rent or mortgage instead of making a car payment. Ultimately, the long-term neglect of payment can result in eviction from a home and the repossession of a vehicle (and this does not consider property taxes, tags and registration, insurance on the vehicle, the nonpayment of any of which could also cause problems with operating the vehicle — and could affect the recipient’s choice of payment). A loss of a vehicle impacts not only the recipient and their ability to look for employment, but also the gas station or convenience stores frequented.
Utilities are usually the first casualties of the either-or game. Many fall behind in utility payments while receiving unemployment benefits. Many also engage in what is known as “juggling,” paying one or a set of bills at the expense of others, then alternating to the neglected bill or set of bills the following month. This works only as long as there is an income with which to generate juggling. The cessation of income, such as being cut off from unemployment benefits when one has no other source of income, eliminates the juggling scenario (unless one is also living off of a pension or one’s life’s savings).
Depending on the level of one’s lifestyle, the cut-off of unemployment benefits also decreases the demand for services, such as lawn care, veterinary services, and household and vehicle maintenance. Grooming services become a luxury as does getting one’s oil changed. Entertainment options — like going to the theatre or an amusement park — are impacted, sometimes eliminated, as are excursions to local restaurants, including fast food establishments.
Collateral damage also accumulates over time, just as the impact of a lessened or eliminated income impacts the individual recipient. Businesses fail for lack of clientele. Restaurants close for lack of customers. Lack of businesses increases the number of unemployed, including those who will in turn file for unemployment benefits. Naturally, the impact becomes greater when commingled with the impact of others under the same economic pressures. Collateral damage can be extensive and debilitating to a local, regional, or national economy in an increasingly outwardly-expanding ripple effect.
The U. S. Senate has now failed to pass the unemployment and tax loopholes extension bill three times. According to CNN Money and the the Washington Post, people on Capitol Hill are talking about shelving or pulling the legislation. In the current sluggish economy and a jobs market that is nearly nonexistent, the decrease in monies to people who help keep their part of the economy viable could have an even more depressing effect on an already depressed system. In short, the so-called “Great Recession” could just as easily become the “Second Great Depression.”
A second Great Depression is collateral damage that all Americans, those employed and those unemployed, would most likely rather do without. Although not a panacea, passage of the benefits and tax loopholes extension bill would forestall at least a portion of the collateral damage incurred. It is certainly preferable to the greater amount of collateral damage that occurs when income is lost.