Before the July 4th Congressional recess, the US Senate failed to extend federally funded unemployment insurance (UI) programs that had paid benefits for up to 73 weeks to workers who ran out of state benefits. Congressional leaders are expected to push again for more long-term UI benefits before the August 9 recess. Meanwhile, hundreds of thousands of Californians are running out of UI – 63,100 more each week – and the state’s job market – with 12.3 percent unemployment in June – is stuck in the doldrums, with no significant job creation expected this year or next.
Some senators argue that the federal government can no longer help the unemployed because the federal deficit is too big. On the contrary, many prominent economists point out that the country’s most immediate economic need is to pump money into local communities: Employers will only hire more workers when consumers demand more goods and services than workers currently on the job can provide.
A little research can help set the record straight on a number of other myths about UI:
- Nationally, there are nearly five unemployed workers for every job opening. In this environment, it is simply not possible for all the unemployed to find work, no matter how highly skilled – or desperate – they may be.
- Without UI benefits, more than two out of five workers experiencing long-term unemployment fall into poverty, according to the Congressional Budget Office.
- Extending UI benefits to the long-term unemployed during a recession does not significantly increase the length of their unemployment, according to the Federal Reserve Bank of San Francisco.
- More workers are jobless longer today than at any time since the Great Depression. Nearly one out of four unemployed workers in the US has been without a job for more than a year.
- In California, more than two out of five jobless workers have been unemployed at least half a year. That’s 5.2 percent of the state’s total workforce – 950,000 workers. There are no more state UI benefits for these workers.
But UI isn’t just for workers; it’s also one of the most effective ways to boost the economy. Jobless workers spend their benefits immediately, and locally. Increasing spending during recessions has always been one of the main goals of the UI program. And that impact could be substantial: The Employment Development Department estimates that as much as $8 billion in additional UI benefit payments would have entered California’s economy if Congress had extended the federal programs through the end of November.
Unemployment Insurance is a public structure that helps individual workers, their families, and their communities – that is, all of us. Unfortunately, unless Congress uses the federal government’s power to keep the UI program going, everyone will lose out.
— Vicky Lovell