New Report Details Job-Creating Impact of Jobless Benefits Extension

A new report from the White House Council of Economic Advisers (CEA) shows why the 13-month extension of federal emergency unemployment insurance (UI) that’s included in this week’s tax-cut compromise between President Obama and Republican leaders is so important.

First, a little background.  Federal emergency UI has two parts:  the temporary, federally funded Emergency Unemployment Compensation program (EUC), created in June 2008, and full federal funding for the permanent Extended Benefits (EB) program, whose cost is typically shared between the states and the federal government.  Full federal funding for EB allowed many states to temporarily expand their EB programs.  Both EUC and full federal funding for EB expired on November 30 but, if Congress enacts the tax-cut compromise, they will both be reinstated and continued through December 2011.

As for the CEA report, it showed that:

Federal UI benefits provide critical assistance to tens of millions of Americans, most of them middle-class.

• Through October 2010, the federal UI program has reached 14 million unemployed workers, and has indirectly benefited 26 million more people living in their households (including 10.5 million children).
• The program has helped households across a broad range of incomes, especially middle-class households, which account for two-thirds of all recipients.
• Without federal UI benefits, the typical recipient household would lose one-third of its income. The loss would be even more dramatic for the 42 percent of households in which the recipient is the sole wage-earner:  UI accounts for 90 percent of these families’ income, on average.

Federal UI benefits provide a significant boost to the economy.

• In September 2010, the nation’s gross domestic product (GDP) was 0.8 percent ($119 billion) higher, and there were 800,000 more jobs, than there would have been without federal UI benefits.
• In December 2011, the CEA estimates that GDP will be 0.6 percent ($92 billion) higher, and there will be 600,000 more jobs, than there will be without federal UI benefits.

The table below shows the CEA’s estimates of the employment effect of federal UI benefits in each state: