Q & A with Chad Stone: The Impact of the Expiration of Federal Emergency Unemployment Benefits
I’m Michelle Bazie and I’m here with Chad Stone, the Center’s Chief Economist, to discuss the expiration of federal emergency unemployment benefits and what it means for millions of jobless workers and the economy.
Chad, the program providing federal emergency unemployment insurance benefits expired today. What did that program do?
In normal times, Michelle, workers who qualify for unemployment insurance can receive up to 26 weeks of benefits. In every recession since the late 1950s, including the latest one, the federal government has created a temporary program that allows workers who cannot find a job before their unemployment insurance runs out to receive additional weeks of benefits as they continue to look for work. That’s the program that ends today.
What does this expiration mean for jobless workers?
If Congress doesn’t vote to continue the program, starting tomorrow, in most states, anyone who runs out of their 26 weeks of regular unemployment insurance will get no further help meeting their families’ bills while they continue to look for a job. The number of weeks of benefits available to people currently receiving federal emergency unemployment insurance will be sharply cut back.
You said the federal unemployment insurance program has always been temporary. Why should it be continued now?
Simply put, it should be continued because we still need the program. To give you some perspective, in the recoveries from past recessions, the highest the unemployment rate has been when the program has ended was 7.2 percent. Today, it’s 9.6 percent. There is only one job available for every five unemployed job seekers, and more than two out of every five unemployed workers has been looking for a job for at least 27 weeks. It was nowhere near this difficult to find a job at the time past programs ended. We need these emergency extended benefits not only to help unemployed workers and their families, but also to help the economy.
Exactly how would the expiration of these benefits affect the economy?
The economic recovery remains anemic. It would benefit greatly from the extra spending unemployment insurance supports. Unemployment insurance replaces half or less of a worker’s earnings. Without federal emergency unemployment insurance, unemployed workers and their families will have to cut back even more than they already have. That means they’ll buy less and the local businesses where they shop and their suppliers will have less incentive to create jobs.
What’s the bottom line?
To help unemployed workers and to give a job-creating boost to the economy, Congress should as quickly as possible extend the program providing federal emergency unemployment insurance benefits for another year. Federal emergency unemployment insurance benefits always end when the economy improves, so it doesn’t create a long-term budget problem. In the meantime, it will provide far more job-creating bang-for-the-buck than the income tax cuts Congress is considering – especially those tax cuts for the highest income taxpayers. In a nutshell, extending these emergency benefits would be good for unemployed workers and their families and it’ll be good for the economy – and it won’t bust the budget.