The economic recession in the United States that started in late 2007, proved to be major blow for people, as well as for the economy. Not only were several people jobless, but there was also utter chaos in the financial and real estate sectors of the economy. There were countless causes of unemployment in the United States, and the Bush as well as Obama administrations were in a constant fight against the turmoil. The Tier 5 extension of 2010, is a legislation that was passed to reform the economic conditions.
There were several economic 'bubbles', in the United States economy, such as the real estate bubble and the banking bubble, that affected and accelerated the rate of unemployment in many states. In simple words, the rate of unemployment was outrageous which contributed to a number of defaulted loans, bad debts, and credit card bills. Further more, several people suffered bankruptcy and foreclosures. The ultimate effect was the fall of the economy which put a lot of hardships on several citizens.
About Unemployment Benefits
- In the year 1932, public administrators and thinkers from Wisconsin, had reached the conclusion that no economy is stable and the ups and downs are bound to affect the people directly.
- Apart from this harsh truth, the United States economy is capitalist in nature, and the government rarely provides employment (except for the government employment which is very limited). The problem of unemployment, is thus, to be dealt with a Federal state joint program known as employment benefits.
- In the year 1935 , when the Social Security Act was passed, the Federal government encouraged the states to start the unemployment benefit schemes.
- As of date, there are 50 unemployment insurance programs that provide benefits to the unemployed people who had to face job cuts as a result of economic condition, or under circumstances where they were not at fault.
- The Federal Unemployment tax further improved the status of unemployment benefits, and it empowered the Internal Revenue Service (IRS) to collect a tax from all employers, annually, for the purpose of employment benefit.
- The employment benefit tax rate is 3% of wages, with the rate being increased to 6.2%. The employers also receive an offset tax credit of 5.4% when economic conditions are stable.
- According to the benefit programs, 26 weeks worth of benefit in proportion to wages is provided. After the 26 weeks, the Congress can pass temporary or permanent extensions, if the economic conditions are very bad.
- Such a set of extensions have been passed in recession period of 2007-2010, which is termed to be Tier 5 extension by the people.
Tier 5 Unemployment Extension 2010
- According to the Bureau of Labor Statistics, the unemployment benefits last for 26 weeks, after which the Congress can provide emergency compensation of tier 5 or more.
- The financial crisis saw the implementation of such successive tiers. The first extension tier was of 20 weeks, which was followed by the second 14-week tier.
- The third tier was of 13 weeks, and the fourth one was of 6 weeks.
- In the June of 2010, the United States Congress realized that the necessity of the tier 5.
- Unemployment extension 2010 was initially planned for 13 weeks, but, at later stage, a decision to implement 7 additional weeks worth extension was reached. People who have already used up these weeks are informally known as 99ers.
The public outcry was, however, against the loss of job opportunities, as the common people of the United States have started demanding jobs, and not extensions.