Behind the Jobless Benefits Debate #2: Do We Still Need a Federal Emergency Unemployment Insurance Program?

November 10, 2010 at 4:37 pm

This is the second of a series of posts that look behind the debate over continuing a federal program that provides emergency unemployment benefits and explain what’s at stake for jobless workers and the economy.

As I discussed in the first post in this series, in every major recession since the 1950s, Congress has created a temporary program to provide additional weeks of unemployment insurance benefits on top of the 26 weeks of regular, state-funded benefits.  The reason is simple:  job opportunities are scarce in a weak economy and it can take jobless workers longer than 26 weeks to find a job, no matter how hard they are looking.

These have always been temporary programs that end when the economy is back on track and job opportunities are starting to open up — but not before then.

Basic economics tells us that we’re still far away from that point, which means it would be a serious mistake to let the current program expire on November 30.  As the chart below illustrates, the highest unemployment rate at which federal unemployment benefits have ended in previous recessions was 7.2 percent (in March 1985).  October’s unemployment rate was 9.6 percent.

We have barely begun to climb out of the huge jobs hole that the recession created.  Over 40 percent of the unemployed have been looking for a job for more than 26 weeks.  Job opportunities remain incredibly scarce, with five job seekers for every opening.

My colleague Hannah Shaw and I issued an analysis today that explains why renewing federal emergency unemployment insurance benefits for another year is good for the unemployed and for the economy, and why it won’t endanger efforts to address long-term budget deficits.

Other posts in the series:

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More About Chad Stone

Chad Stone

Chad Stone is Chief Economist at the Center on Budget and Policy Priorities, where he specializes in the economic analysis of budget and policy issues. You can follow him on Twitter @ChadCBPP.

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4 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. inez Butterfield #

    The GOP’s not interesting in balancing the budget, the just want to keep the Bush taxes.
    I have a suggesting for Balancing the Budgets.
    1, Roll back all of the GOP’s yearly income to $150,000 a year and
    2, the retired government senators cut back their yearly benefits to $50,000 a year
    Alone cut back their medicare payments.
    3. Each senator and need to pay out of pocket over half of their medical benefits.
    4. And the senators that were caught stealing money for the VA’s
    should have his job take away from him and be put in jail, without pay.
    He worst the booms in the streets.
    If a poor person did that he would be put in jail for life.

  2. 2

    The Congressional Budget Office’s analysis submitted to Congress agrees with you wholeheartedly:

    If it’s “Jobs, Jobs, Jobs” we want, CBO estimates that upping aid to the unemployed creates 8 – 19 full-time-equivalent jobs per $1,000,000 spent. By contrast, reducing income taxes in 2011 creates 1 – 3 jobs (with other possible policy measures in between).

    If you listen carefully, you can hear the tax-cut enthusiasts chanting “job, job, job.”

    • inez Butterfield #

      We can not blame the Democrats party at lease they are trying to help us. The blame should be casted down on the GOP’s. The only thing they interested in is balance the budge which mean taking for the lower income, and the so call middle class by let everyone unemployment benefits expire November 30. and they want to keep the Bush taxes for the millions, and they will raise our medicare prem/part B. And make us pay 15% at the gas pumps. Now tell me .
      If we living on unemployment and no money where are we going to get the money from?

      The people put the GOP’s back in charge Now they will strip you right’s away.
      Is this what the American want?

  3. Julie Massa #

    Thank you for this analysis. As a public policy professional with great community contacts, I’ve never had such difficulty securing permanent employment. My 26 weeks of unemployment will end mid-December. I can’t imagine what will happen after that. I have some job leads, but they’re just leads.

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