7/30/2019 Congress Should Extend Emergency Unemployment Benefits

http://slidepdf.com/reader/full/congress-should-extend-emergency-unemployment-benefits 1/6

1 Center or American Progress |  Congress Should Extend Emergency Unemployment Beneits

Congress Should Extend Emergency

Unemployment BenefitsSarah Ayres November 13, 2012

For monhs poliicians and economiss have warned us abou he scal cli—he com-

 binaion o ax increases and governmen spending cus hreaening economic chaos

scheduled o occur a he end o he year. Bu ew are alking abou he scal cli ha aces

millions o unemployed Americans who will suddenly lose unemploymen benes on

 January 3, 2013, i Congress ails o ac. Since he sar o he Grea Recession, lawmakershave recognized ha millions o Americans who wan a job canno nd one, and hey have

provided exra weeks o unemploymen benes o help cover workers’ los income while

hey job search. Mainaining hese benes is he righ hing o do or he U.S. economy 

and or he amilies who rely on unemploymen insurance o pay he bills.

Congress has provided exended unemploymen benes in every major recession since

he 1950s, and o le hem expire now would be unprecedened and unwise. Lawmakers

have never allowed hese benes o expire when he unemploymen rae was more han

7.2 percen. No only does he naional unemploymen rae remain relaively high—7.9

percen in Ocober—bu workers are also nding hemselves unemployed or longer hanever beore—longer han saes are able o provide hem wih unemploymen benes.

 And unemploymen benes aren’ jus imporan o he unemployed—hey’re also good

or he economy. By puting money ino he pockes o people who will spend i, unem-

ploymen benes boos demand, spur economic growh, and propel job creaion. In ac,

he nonparisan Congressional Budge Oce ound ha unemploymen benes are one

o he mos eecive scal policies o increase economic growh and employmen.

Tis issue brie discusses he hisory o exending unemploymen benes during eco-

nomic downurns, explains he issues ha ace Congress, and lays ou ve reasons why 

 we should exend unemploymen benes.

7/30/2019 Congress Should Extend Emergency Unemployment Benefits

http://slidepdf.com/reader/full/congress-should-extend-emergency-unemployment-benefits 2/6

2 Center or American Progress |  Congress Should Extend Emergency Unemployment Beneits

What are emergency unemployment benefits?

Unemploymen insurance is an imporan social insurance program providing income

suppor o workers who have los heir job hrough no aul o heir own and are no able

o nd a new one. Employers pay axes o saes, and saes use hese unds o provide

emporary and parial wage replacemen o unemployed workers. In normal economic

imes, unemployed workers are eligible or up o 26 weeks o benes in mos saes. Inperiods o high unemploymen during and immediaely ollowing recessions, Congress

has repeaedly enaced legislaion o provide workers exended ederal unemploymen

 benes in addiion o regular sae benes.

In June 2008, seven monhs aer he sar o he Grea Recession, Presiden George

 W. Bush and Congress approved such legislaion. Te Emergency Unemploymen

Compensaion Ac iniially provided 13 addiional weeks o unemploymen compensa-

ion. Laer ha year Congress raised he maximum amoun o unemploymen benes

o 33 weeks. In ligh o coninuing high unemploymen raes, subsequen legislaion

 was enaced in 2009, 2010, and 2011 ha exended emergency benes and raised hemaximum amoun o 53 weeks.

Under he mos recen exension, he Middle Class ax Relie and Job Creaion Ac o 

2012, emergency unemploymen benes will expire a he end o 2012. I Congress

does no ac o exend benes, more han 2 million Americans will lose ederal unem-

ploymen insurance jus aer Chrismas wih anoher 900,000 esimaed o lose heir

 benes in he rs hree monhs o 2013.1

Why should Congress extend emergency unemployment benefits?

Unemployment rates are still high

Despie 32 monhs o susained job gains, here are sill oo many Americans who can-

no nd work. Te U.S. economy has added 2.1 million jobs over he pas 12 monhs

compared o 1.9 million over he preceding 12 monhs, bu a 7.9 percen he unem-

ploymen rae is sill relaively high.2 In Sepember here were more han hree workers

acively searching or work or every job available, compared o jus one and a hal job

seekers per job opening beore he sar o he Grea Recession.3

o allow unemploymen benes o expire when he unemploymen rae is so high

 would be unprecedened. Lawmakers have esablished ederal emergency unemploy-

men benes in every major recession since he 1950s and have never allowed hese

 vial benes o expire when he unemploymen rae was above 7.2 percen.

7/30/2019 Congress Should Extend Emergency Unemployment Benefits

http://slidepdf.com/reader/full/congress-should-extend-emergency-unemployment-benefits 3/6

3 Center or American Progress |  Congress Should Extend Emergency Unemployment Beneits

State unemployment benefits are not sufficient

No only is he unemploymen rae sill relaively high bu Americans are also nding

hemselves ou o work or longer periods o ime han was he case in previous eco-

nomic downurns. While he average unemployed person has been ou o work and

searching or a new job or 40 weeks, saes only provide unemploymen benes or a

maximum o 26 weeks.4 No surprisingly, close o hal o unemployed workers run ouo sae unemploymen benes beore nding a new job.5 Federal exended benes

provide much-needed income suppor during his ime when many Americans would

oherwise be le unable o pay heir ren or pu ood on he able.

Exended emergency benes are even more necessary now han hey have been in he

pas because he Grea Recession was deeper and more proraced han any recession

since he Grea Depression. While he economy has pulled ou o he dephs, many 

 job seekers coninue o ace longer periods o unemploymen han ever beore. When

Congress has allowed emergency benes o expire in he pas, he median lengh o 

unemploymen has never opped 10.2 weeks and he share o workers who have beenou o work or six monhs or more has no exceeded 23 percen.6 oday he median

lengh o unemploymen is nearly 20 weeks and more han 40 percen o he unem-

ployed have been ou o work or six monhs or more.7 Wih more and more Americans

nding ha i akes a much longer ime o nd work han is allowed by sae unemploy-

men programs, i would be unprecedened or Congress o le emergency unemploy-

men compensaion expire.

Unemployment benefits grow the economy and create jobs

Unemploymen benes have consisenly been cied by economiss as one o he

mos eecive policies a spurring economic growh. Every week more han 2 million

 Americans receive an average emergency unemploymen bene check o abou $300—

money ha is spen on ren or he morgage and uiliies, as well as in local supermar-

kes, pharmacies, gas saions, and newssands. By puting money ino he pockes o 

he middle-income Americans who are mos likely o spend i, unemploymen benes

 boos demand and creae jobs.

Te nonparisan Congressional Budge Oce ound ha unemploymen benes are

he mos eecive scal policy o increase economic growh and employmen—beter

han reducing business axes or increasing spending on inrasrucure.8 Mark Zandi,

chie economis a Moody’s Analyics, has ound ha every dollar spen on unem-

ploymen insurance grows he economy by $1.55.9 Recenly, Zandi has prediced ha

exending emergency unemploymen benes a a cos o $40 billion would boos he

economy by $58 billion in 2013.10

7/30/2019 Congress Should Extend Emergency Unemployment Benefits

http://slidepdf.com/reader/full/congress-should-extend-emergency-unemployment-benefits 4/6

4 Center or American Progress |  Congress Should Extend Emergency Unemployment Beneits

 All hese dollars circulaing hrough he economy creae jobs. A deailed sudy by economis

 Wayne Vroman or he U.S. Deparmen o Labor ound ha during he wors o he reces-

sion, emergency unemploymen benes led o he creaion o 700,000 jobs per quarer.11 

Conversely, i emergency unemploymen benes are allowed o expire, millions o 

 Americans will suddenly have less money o spend in sores, creaing a drop in demand

ha will rob businesses o heir cusomers and undermine he economic recovery.

Unemployment benefits lift people out of poverty

Unemploymen benes help millions o Americans coninue o eed heir amilies and

keep a roo over heir heads even when hey lose heir job. In doing so, unemploymen

 benes are an imporan mechanism or prevening people rom alling ino povery.

In every year since he sar o he recession, unemploymen benes have kep mil-

lions o people ou o povery. An analysis by he Congressional Research Service oundha unemploymen benes lied 3.3 million people ou o povery in 2009, including

nearly 1 million children living wih a amily member who received unemploymen ben-

es.12 Te same sudy ound ha he povery rae or amilies who received unemploy-

men benes was abou hal wha i would have been wihou unemploymen benes.13 

In 2010 he U.S. Census ound a similar eec: I unemploymen benes were excluded

rom income, 3.2 million people would have been couned as poor.14 And in 2011 unem-

ploymen benes kep 2.3 million people ou o povery.15

Should Congress ail o exend emergency unemploymen benes, millions o amilies

his holiday season will nd hemselves wihou sucien unds o pay or necessiieslike ood and hea—much less Chrismas presens or heir kids. By exending unem-

ploymen benes we can help keep hese amilies afoa and ou o povery.

Congress already cut unemployment benefits this year

 When Congress exended emergency unemploymen compensaion earlier his year,

lawmakers also reduced he amoun o unemploymen benes available o workers. Te

10-monh exension agreed o in February cus he number o weeks o ederal unem-

ploymen benes available o all saes and raises he unemploymen rae hreshold or

saes o receive maximum benes.

Under he previous law any unemployed worker who exhaused heir sae benes was

eligible or a leas 20 addiional weeks o benes hrough emergency unemploymen

compensaion. I he worker lived in a sae wih high unemploymen, he could receive

up o 53 weeks o addiional benes. Under oday’s law unemployed workers are eli-

7/30/2019 Congress Should Extend Emergency Unemployment Benefits

http://slidepdf.com/reader/full/congress-should-extend-emergency-unemployment-benefits 5/6

5 Center or American Progress |  Congress Should Extend Emergency Unemployment Beneits

gible or a leas 14 addiional weeks o emergency unemploymen compensaion and

up o 47 weeks i hey live in a high-unemploymen sae.

Largely as a resul o hese changes, ewer unemployed Americans are receiving unem-

ploymen benes. While he number o unemployed workers has allen by 11 percen

since his ime las year, he number o hose receiving benes has dropped by 26 per-

cen. Las year nearly hal o all unemployed workers received unemploymen benes.16 Only 40 percen do oday.

 Wih so many ewer Americans receiving benes, now is no he ime or Congress o

urher cu unemploymen insurance benes. I Congress ails o exend emergency 

unemploymen benes, i is likely ha come January ewer han one in hree unem-

ployed workers will be eligible or benes.17 

Conclusion

 A he end o his year, millions o unemployed Americans will be abruply cu o rom

unemploymen benes unless Congress akes acion o exend emergency unemploy-

men compensaion. Allowing exended unemploymen benes o expire will no

only harm he many Americans who rely on unemploymen benes o provide ood

and sheler or hemselves and heir amilies—i will also harm he economic recovery 

 by reducing demand and sifing job creaion. America canno aord o le emergency 

unemploymen benes expire.

Sarah Ayres is a Research Associate at the Center for American Progress.

7/30/2019 Congress Should Extend Emergency Unemployment Benefits

http://slidepdf.com/reader/full/congress-should-extend-emergency-unemployment-benefits 6/6

6 Center or American Progress |  Congress Should Extend Emergency Unemployment Beneits

Endnotes

1 National Employment Law Project, “Looming Financial Cli or Long-term Unemployed” (2012), available at http://nelp.3cdn.net/11771d2e6324004434_tbm6i269i.pd .

2 Bureau o Labor Statistics, Employment Situation Summary– October 2012 (Department o Labor, 2012).

3 Bureau o Labor Statistics, Job Openings and Labor Turn-over Survey (Department o Labor, 2012).

4 “Table A-12. Unemployed persons by duration o unemploy-ment,” available at http://www.bls.gov/news.release/empsit.t12.htm.

5 Employment and Training Administration, “UnemploymentInsurance Weekly Claims Report.”

6 Sarah Ayres, “Failing to Extend Emergency UnemploymentBenets Would be Unprecedented,” Center or AmericanProgress, November 13, 2012.

7 “Table A-12. Unemployed persons by duration o unemploy-ment.”

8 Congressional Budget Ofce, “Policies or Increasing Eco-nomic Growth and Employment in 2012 and 2013” (2011),available at http://www.cbo.gov/publication/42717.

9 Mark Zandi, “At last, the U.S. Begins a Serious FiscalDebate,” Moody’s Analytics, April 14, 2011, availableat http://www.economy.com/dismal/article_ree.asp?cid=198972&src=msnbc.

10 Mark Zandi, “U.S. Macro Outlook: Policymakers MustGet It Right, Moody’s Analytics, July 16, 2012, avail-able at http://www.economy.com/dismal/article_ree.asp?cid=232471&src=mark-zandi.

11 Heather Boushey and Matt Separa, “UnemploymentInsurance Dollars Create Millions o Job s,” Center orAmerican Progress, September 21, 2011, availableat http://www.americanprogress.org/issues/labor/news/2011/09/21/10367/unemployment-insurance-dollars-create-millions-o-jobs/.

12 Thomas Gabe and Julie Whitaker, “Antipoverty Eects o Unemployment Insurance” (Washington: CongressionalResearch Service, 2011).

13 Ibid.

14 Carmen DeNavas-Walt, Bernadette Proctor, and JessicaSmith, “Income, Poverty, and Health Insurance Coverage inthe United States: 2010” (Washington: U.S. Census Bureau,2011), available at http://www.census.gov/prod/2011pubs/p60-239.pd .

15 Robert Greenstein, “Statement o Robert Greenstein,President, on Census’ 2011 Poverty, Income, and HealthInsurance Data,” Center on Budget and Policy Priorities,September 12, 2012, available at http://www.cbpp.org/cms/index.cm?a=view&id=3832.

16 Employment and Training Administration, “Unemploy-ment Insurance Weekly Cl aims Report,” November 8, 2012,

available at http://www.dol.gov/opa/media/press/eta/ui/current.htm#.UJvKW2ePxCA.

17 National Employment Law Project, “Phase Out o FederalUnemployment Benets” (2012), available at http://www.nelp.org/page/-/UI/2012/EUC_act_sheet.pd?nocdn=1.