A National Career Fairs' job fair in New York in October.(Photo: Bebeto Matthews, AP)
About 2 million jobless Americans fear they'll lose their extended
unemployment benefits, which are slated to end next month unless
Congress votes to renew them.
Their concerns make a new finding all the more puzzling: Many people eligible for unemployment don't even bother to collect it.
In the depths of the recession in 2008 and 2009, only half of
those who qualified for benefits applied, a study by the St. Louis
Federal Reserve Bank shows.
The portion filing for benefits
shot up to 95% in 2010 and 2011, the study says, but that still means
about 200,000 people didn't claim money to which they were entitled.
"They're throwing the money out the window," says David Fuller, an
economics professor at Concordia University in Montreal and co-author
of the report, which analyzed Bureau of Labor Statistics data.
Many unemployed people aren't eligible for benefits because they
worked part-time or weren't at their jobs long enough, for example. In
2009, about 3 million of the average 14.5 million or so jobless people
didn't qualify for benefits.
But of the roughly 11.4
million who were laid off and eligible to collect that year, only about
5.7 million filed claims, according to Fuller and the BLS. Those who
didn't saved state and federal governments $108 billion nearly as much
as the $121 billion in benefits paid, the study says. That sum dwarfed
the $11 billion in benefit overpayments due to clerical errors or fraud.
States pay the first 26 weeks of unemployment insurance. During
and after the recent recession, the federal government has paid extended
benefits beyond that up to 73 weeks.
The willingness of
many jobless Americans to forego unemployment checks isn't new. From
1988 to 2011, an average 37% of those eligible passed on the benefits.
share of people applying for benefits has risen or fallen along with
average duration of unemployment. For example, Americans were out of
work for an average of 18 weeks in 2008 and 24 weeks in 2009 when only
half of those eligible applied. But average joblessness rose to about
33 weeks in 2010 and 39 weeks last year as the share seeking benefits
soared to 95%.
Average jobless duration has hovered near 40
weeks this year. But it should dip to about 37 weeks in 2013, says Mark
Zandi, chief economist of Moody's Analytics. That suggests the portion
seeking benefits could drop slightly.
People who don't
expect to be out of work long may not apply initially but file claims
later as their jobless spells drag on, Fuller says. Some of those who
receive severance payments may face restrictions on when they can apply,
though that likely accounts for only a fraction of non-collectors, he
Other workers, he says, may fear that seeking benefits
would rankle their former employers, who must pay more into the
unemployment insurance system as more of their workers collect benefits.
Still others are more likely to take a pass in states known
for making it tough to apply or qualify, or for investigating
applicants whose eligibility is questionable, says Claire McKenna of the
National Employment Law Project.