1 Center or American Progress | Congress Should Extend Emergency Unemployment Beneits Congr ess Should Ex tend Emergency Unemployment Benefits Sarah Ayres November 13, 2012 For monhs poliicians and economiss have warned us abouh e scal cli—he com- binaion oax inc reas es an d go vernmens pendi ng cu s hr eaening economic c haos scheduled o occur ahe end ohe year. Buew are alking abouhe scal clihaaces millions ounemployed Americans who will suddenly lose unemploymenbenes on Jan uary 3, 2013, iCon gres s ails o a c. Since he sarohe Gr eaRecess ion, lawma kers have recognized hamillions oAmericans who wana job cannond one, and hey have provided exra weeks ounemploymenbenes o help cover workers’ losincome while hey job search. Mainaining hese benes is he righhing o do or he U.S. economyand or he amilies who rely on unemploymeninsurance o pay he bills. Congress has provided exended unemploymenbenes in every major recession since he 1950s, and o leh em expire now would be unprecedened and unwise. Lawmakers have never allowed hese benes o expi re when he unemploymenrae was more han 7.2 percen. Noonly does he naional unemploymenrae remain relaively high—7.9 percenin Ocober—buworkers are also nding hemselves unemployed or longer han ever beore—longer han saes are able o provide hem wih unemploymenbenes. And u nemp loymen ben es aren ’ju simporan o he un emplo yed—hey’r e also good or he economy. By puting money ino he pockes opeople who will spend i, unem- ploymenbenes boosdemand, spur economic growh, and propel job creaion. In ac, he nonparisan Congressional BudgeOce ound haunemploymenbenes are one ohe moseecive scal policies o increase economic growh and employmen. Tis issue briediscusses he hisory oexending unemploymenbenes during eco- nomic downurns, explains he issues haace Congress, and lays ouve reasons whywe should exend unemploymenbenes.
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7/30/2019 Congress Should Extend Emergency Unemployment Benefits
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.
7/30/2019 Congress Should Extend Emergency Unemployment Benefits
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-
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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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.