The case for extending unemployment insurance, in one chart

December 5, 2013

Congress is starting to take notice of the fact that more than 1.3 million people will lose their jobless benefits on Dec. 28 unless lawmakers renew an emergency aid program for the unemployed that's set to expire this year.


House Democrats said on Thursday that they won't support a budget deal unless it includes a one-year extension of the Emergency Unemployment Compensation program, which would cost roughly $25.1 billion. In response, Republican Speaker John Boehner said he would "entertain" the idea of an extension but wants to see a specific proposal from the White House first.

Naturally, this raises further questions: Where does it all end? Will a program that was meant to provide "emergency" aid to the long-term unemployed get extended indefinitely, year after year? And how much does the job market need to improve before this program can shrink back to normal levels?

Over at the Center on Budget and Policy Priorities, Chad Stone offers one way to think about this question. Technically, we're still very much facing a jobs "emergency," even after years of recovery. That's particularly true for workers who have been out of work for 27 weeks or more — the people most likely to be affected by the cut-off in benefits:

11-20-13ui-f3

In each of the previous three recessions, Stone notes, federal aid for the unemployed didn't end until the long-term unemployment rate had dropped to around 1.3 percent.

Right now, that long-term unemployment rate is falling, but it's still at 2.6 percent, roughly as high as it's been at any point since World War II. (The rate briefly peaked at 2.6 percent in 1983 but declined thereafter, and federal unemployment aid still continued for another year and a half.)

So even with steady improvement of late, the number of people who have been out of work for longer than 27 weeks is still historically high. And what economic research we have suggests that many workers won't quickly find jobs once their unemployment benefits expire — there aren't enough jobs to go around. Instead, many of them will simply give up and drop out of the labor force.

Still, it's unclear whether lawmakers will be swayed by this argument, especially at a time when the unemployment rate is falling and lawmakers are focused on restraining spending rather than boosting it. "I don’t see much appetite from our side for an extension of benefits. I just don’t,”  Rep. Tom Cole (R-Okla.) told the Post earlier this week.

Further reading:

-- A complete explanation of how and why the unemployment benefits of 2.1 million workers are set to expire early next year.

-- Rep. Sandy Levin (D-Mich.) is trying to pass a one-year extension of the jobless benefits. Here's our Q&A with him on the topic.

-- If you want an argument for letting the emergency unemployment-aid program end, here's Casey Mulligan over at The New York Times arguing that the expiration isn't nearly as big a deal this year because new health-care subsidies are kicking in.

-- Over at the Weekly Standard, economist Michael Strain has a longer discussion of other possible ways to help the long-term unemployed. Extending jobless aid, he argues, is far from the only thing that could be done.

Comments
Show Comments
Most Read Business
Next Story
Sarah Kliff · December 5, 2013