CHN: Federal Unemployment Insurance Set to Expire: Congress Must Act

Unless Congress acts to extend the federal unemployment insurance (UI) program it will expire on December 29, abruptly cutting off 1.3 million people between Christmas and New Year’s.  Another 1.9 million would lose access to benefits in the first six months of 2014 when their regular state UI benefits run out.  The consequences for struggling workers and their families would be devastating.  (See House Ways and Means Democratic Report with state-by-state estimates of the number who would lose benefits.)
In the 1982, 1991 and 2002 recessions and the most recent Great Recession, Congress has created a temporary federal unemployment benefits program for unemployed workers who had exhausted up to 26 weeks of state UI benefits.  In June 2008, Congress passed the federal Emergency Unemployment Compensation (EUC) program.  The program has been extended or amended 11 times since then.  The EUC program provides more weeks of benefits to unemployed workers in states with highest unemployment rates.  Two years ago unemployed workers in states with the highest unemployment rates received up to 99 weeks of assistance including state UI.  Currently the average maximum number of weeks is about half that amount.  Due to across-the-board sequestration cuts in 2013 the average weekly EUC benefit has dropped by $42 to $256.

The Great Recession officially ended in June 2009.  However, the unemployment rate remains stubbornly high, ticking back to 7.3 percent in October from 7.2 percent a month earlier.  Further, the drop in unemployment over the last year has been due in large part to people either dropping out of the job market or not entering it because of the lack of job opportunities.

About 37 percent of the nation’s 11.3 unemployed or over 4.1 million people have now been unemployed for longer than 6 months.  They are searching for employment in an economy that has 2 million fewer jobs than when the Great Recession started in December 2007 and a jobs deficit of over 8 million.  The ratio of job seekers to job openings is 2.9-to-1 which means that there are no jobs for nearly two out of three seeking employment according a report from the Economic Policy Institute (EPI).

Based on estimates from the Department of Labor the cost of keeping the current EUC program running in 2014 when the unemployment rate is predicted to remain high is $25.2 billion.   The cost must be examined in the context of the overall economy and the ‘multiplier’ effect of the investment in the program.  Families receiving UI benefits spend them on food, rent, and other necessities that increase economy activity.  The EPI report cited above estimates that extending the EUC program would create an estimated 310,000 jobs in 2014, and lead to $14.1 billion in higher revenues (from individual and business taxes) and lower expenditures in other areas.

In 2012, unemployment insurance kept 1.7 million people from being poor.  Failure by Congress to act to extend the EUC program would harm millions of families and deal another blow to an economy struggling to recover from lost jobs.

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