Why We Should Renew Federal Emergency Unemployment Insurance, Part 1

December 5, 2012 at 12:45 pm

My latest US News & World Report blog post urges policymakers to address the scheduled expiration of federal emergency unemployment insurance at the end of this year:

Policymakers must not let emergency federal unemployment insurance fall through the cracks as they work to solve the fiscal cliff dilemma.  The stakes are too high for unemployed workers who are still struggling to find a job and for the economy itself.

Unemployment insurance gives valuable financial support to unemployed workers and their families.  The federal emergency program, called Emergency Unemployment Compensation (EUC), provides additional weeks of benefits to workers who run out of their regular state benefits before they can find a new job.  EUC has a high “bang-for-the-buck” impact as stimulus because jobless workers spend the money fast and its effects spread through the economy.

A recent Congressional Budget Office report estimates that renewing EUC for another year, which would cost $30 billion, would boost gross domestic product by 0.1 percent to 0.5 percent next year and raise full-time-equivalent employment by 100,000 to 500,000 in the fourth quarter of 2013.  It also would help millions of jobless workers and their families make ends meet.

Moreover, because it’s a temporary program, EUC does not contribute to deficits over the longer term.

The map shows what will happen if policymakers don’t renew EUC for another year.  Workers who lose their jobs in 2013 would receive only regular state unemployment insurance — a maximum of 26 weeks of benefits or less in nearly every state — in an economy where jobs remain hard to find.  The latest jobs report, for October, shows that 5 million jobless workers — 40.6 percent of the 12.3 million people who are unemployed — have been looking for work for 27 weeks or longer.

In Part 2 of this post, I’ll show that it is unprecedented for policymakers to let emergency federal UI expire with unemployment as high as it is.

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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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1 Comments Add Yours ↓

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    I agree that the EUC should be extended during this time of high unemployment. These programs not only help those who need it, they will spend it immiediately and locally. It can also offer time for some of those recieving EUC to upgrade their skill set and be able to find “decent work.” Veterans in particular have benefited in this way. As many have left the service due to being away from their families for extended periods.

    EUC benefits offer the chance to find gaiful employment without the need for state assistance programs. For those who have “been down-sized” it offers the help needed to find a new direction, to keep their mortage payments and head up during this “down” time.

    State educational programs like “NO Worker Left Behind” that Michigan had, proved that the EUC funding works by providng the training to get a job while recieving benefits. The Federal Government currently has a program called VRAP for veterans 35-60 that will help defer the costs of getting training for one year, EUC compensation would benefit them directly, by helping them to continue in an educational program during that year.

    It is an investment that provides not only a personal benefit to the recipient, but one that is recyled back into the economy. America needs more of this type of investment.

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