Big Cuts in Store for the Unemployed?

November 4, 2010 at 1:45 pm

When Congress returns to work in two weeks, it faces an important decision:  whether to let federal emergency unemployment insurance (UI) benefits, which are helping 5 million jobless workers and their families, expire even though unemployment is near 10 percent and expected to stay above 9 percent through 2011.

The emergency measures, which provide additional weeks of federal benefits to unemployed workers who exhaust their 26 weeks of regular, state-funded UI benefits before they can find a job, are scheduled to expire November 30.  If Congress lets these measures expire, it will be 26-weeks-and-out for unemployed workers in most states and benefits will be sharply curtailed in the rest (see map).  (Some states will continue to provide up to 20 additional weeks of benefits, but they will have to pay half of the cost.)

Congress has provided emergency UI benefits in every major recession since the 1950s and has kept that emergency program in place until the economy was back on track and job prospects were improving.  In all previous cases, the unemployment rate was 7.2 percent or lower when the program expired.  It’s 9.6 percent now and showing no signs of coming down quickly.

Finding a job remains extremely difficult:  about 15 million people are competing for about 3 million job openings.  That means that even if every job opening were instantly filled with an unemployed worker, four out of five unemployed workers would still be looking for a job.  This situation is far worse than in the recovery from the 2001 recession, as the chart below shows.

As the November 30 deadline approaches, we will be reminding policymakers and others of the critical importance of continuing emergency UI benefits through next year.  That wouldn’t just help millions of jobless workers cope with a dismal job market; it would also help keep the economic recovery moving along by averting a severe blow to these families’ spending.

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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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