Why Extending The Federal Unemployment Benefits Program Matters To The States

The wealthiest few are making out gangbusters in this economic recovery, but many ordinary Americans are still reeling from the Great Recession even today. In fact, long-term unemployment is still the highest it's ever been since World War II.

One more troubling sign comes from the recent expiration of the federal Emergency Unemployment Compensation program. Just a few days after Christmas, 1.3 million unemployed Americans still searching for a job abruptly lost their unemployment benefits because some in Congress refused to extend the program. Through 2014, five million Americans will be cut off from this economic lifeline, with thousands or tens of thousands of people harmed in each state.

Here are resources on why extending this federal program matters to the states.

State-By-State Information:

What To Know:

Cutting off this meager economic lifeline only encourages job searchers to give up and drop out of the work force.

  • No one gets unemployment benefits indefinitely, and people must keep looking for a job in order to get the benefits. What the federal Emergency Unemployment Compensation program does is give Americans who've been laid off a little more time to get back on their feet.
  • North Carolina's experiment with cutting off unemployment insurance is a failure. As a result, the state's unemployment rate went down because people gave up the job search and dropped out of the work force. "People are not getting into jobs. They are getting out of the labor force."
  • Research shows that people who get federal unemployment insurance benefits spend more time looking for work than people who aren't eligible for those benefits. In fact, since Congress enacted the federal unemployment program, "time spent looking for a job has tripled among the long‐term unemployed who are out of work."
  • The average unemployment check is only $300 per week. These Americans want to be taking home a full-time paycheck, not meager unemployment benefits that only let them scrape by.
  • Economic research affirms that unemployment benefits keep recipients in the labor force  -- far from encouraging them to delay nailing down a new job.

North Carolina's example is a warning.

  • In July 2013, right-wing leaders in North Carolina cut the maximum length of the unemployment benefit from 99 weeks to just 19 and cut the weekly benefit amount from $535 to $350.
  • The state is now experiencing the largest labor-force contraction ever in its history -- 77,000 fewer people were working or searching for work last October than a year ago.
  • The number of North Carolinians receiving unemployment benefits has also collapsed. It’s down by 45,000, or 40 percent, since 2012. At the same time, more jobs aren't magically appearing for these jobless workers.

People are relying on unemployment insurance longer because the job market is still weak and it's still extraordinarily tough out there.

  • The average job-hunter takes about 35 weeks to find a new job due to the weak recovery. However, because the federal program has been cut off, most states will go back to offering only 26 weeks of unemployment benefits at most.
  • There are still 3 applicants per job opening, according to Department of Labor data.
  • Long-term unemployment is still the highest it's ever been since World War II.
  • Americans who've been job searching for a long time face discrimination even if they're perfectly good workers. Prospective employers won’t even look at resumes of people who have been unemployed for more than six months.

Cutting off families from this economic lifeline goes against the values we hold as Americans.

  • Families depend on unemployment benefits when a breadwinner loses a job. In 2012, nearly 450,000 children were kept out of poverty by unemployment benefits. Unemployment insurance has also lowered poverty by 25% for children who have had an unemployed parent.
  • Even after they're eventually hired, the period of unemployment they've gone through has lasting impact, lowering their earnings for the rest of their lives. That undermines our values and beliefs about hard work and making it in America.
  • America has never abruptly cut off emergency unemployment insurance when we faced this level of long-term unemployment.

This is about priorities and choices.

  • Many Republicans in Congress have previously supported and even voted for unemployment benefits without offsets, including twice during President George W. Bush’s administration.
  • The most recent government shutdown caused by a small group of reckless and irresponsible Members of Congress cost our economy $24 billion.
  • Making hedge fund managers play by the same tax rules as every other American would raise about $4 billion per year. There are plenty of other wasteful tax loopholes we could close to raise money for priorities that put American families first.
  • In contrast, an extension for FY2014 of the federal Emergency Unemployment Compensation program would cost $26 billion.
  • A limited 3 month extension, as proposed by Senators Reed (D-RI) and Heller (R-NV), would cost $6.4 billion.

The American people strongly supports the choice to extend the unemployment program.

  • 55% of Americans agree the Emergency Unemployment Compensation program should be extended, compared to only 34% who say it should end.
  • At least 63% of constituents in districts represented by Republican Members of Congress support continued unemployment benefits for jobless Americans.
  • Even the American Enterprise Institute supports an extension because “the labor market is still in bad shape, the economy is still weak, there are three times as many unemployed workers as job openings."
  • In 2002, when the unemployment rate was a full point lower than today's, President George W. Bush said: "These Americans rely on their unemployment benefits to pay for the mortgage or rent, food and other critical bills. They need our assistance in these difficult times, and we cannot let them down.”

Local economies depend on UI. Unemployment benefits are money in people's pockets, which then go right back into our economy.

  • State economies directly lost $400 million in one week because some in Congress refused to extend the federal Emergency Unemployment Compensation Program.
  • The failure to extend the program is costing our broader economy up to $1 billion per week. (As a result of the economic ripple effects of $400 million being taken out of these Americans' pockets in one week, the economy lost between $600 million to $1 billion.)
  • If unemployment benefits are not restored, America will lose about 200,000 jobs and up to or up to 310,000 jobs this year due to reduced consumer spending. On the other hand, putting money in people's pockets puts them back shopping in local businesses, which then have to hire up to keep up with sales.
  • Unemployment benefits have big bang for the buck. For every $1 in extended unemployment benefits jobless Americans get, about $1.50 goes back into the local economy as they buy basics like groceries and gas.
  • The program also partially offsets its own costs by helping to generate tax revenue through increased economic activity and keeps families from relying on other programs like food stamps or Temporary Assistance to Needy Families.
  • Due to the program's substantial boost to our economy and given all the other above factors, extending unemployment benefits would have a net cost to the Federal government that is less than the official cost.