Congress Should Extend Emergency Unemployment Benefits
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Transcript of Congress Should Extend Emergency Unemployment Benefits
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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.
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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.
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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
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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-
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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.
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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.