STATEMENT BY CHAD STONE, CHIEF ECONOMIST,
ON THE JANUARY EMPLOYMENT REPORT
Today’s employment report
provides fresh evidence both that the economy is slowing and that Congress
should include a temporary extension of unemployment insurance benefits in its
fiscal stimulus package.
The percentage of the
unemployed who have been looking for a job for more than half a year and are
still out of work — the group that extended unemployment benefits target — is
mounting. In January, 18.3 percent of the unemployed had been looking for a job
for at least 27 weeks. (Unemployment benefits are cut off after 26 weeks in most
states.) At the start of the last recession in March 2001, in contrast, the
long-term unemployed made up only 11.1 percent of all unemployed workers.
The percentage of the
unemployed who have been out of work this long is unusually high for this point
in the business cycle. So is the percentage of the total labor force consisting
of long-term unemployed workers.
This is a source of concern
not only for these families but for the economy as a whole. Job creation ground
to a halt this month, and the Department of Labor’s alternative unemployment
rate measure — which includes people who want to work but are discouraged from
looking as well as people working part time because they can’t find full-time
jobs — rose to its highest level since September 2005. When workers lose their
jobs and then exhaust their unemployment benefits before they can find new jobs,
they cut their consumption, deepening the economic downturn.
A temporary extension of
unemployment insurance benefits would help the people hardest hit by the
weakening economy and would boost the economy with one of the fastest acting and
most effective forms of stimulus available. Unlike tax rebates, which can’t
begin to go out until mid-May, extended unemployment benefits could start
reaching workers and boosting consumption within 30 days.
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