Federally funded extended unemployment insurance (UI) benefits are set to expire at the end of this year. These benefits serve two very useful public purposes. Most obviously, they provide a lifeline to the long-term unemployed and their families during the deepest and longest economic downturn since the 1930s. Less understood but equally crucial, the UI benefit extensions boost spending in the economy and thereby create jobs. We find that continuing the extensions through 2014 would generate spending that would support 310,000 jobs. If this program is discontinued, the economy will lose these jobs.
Why extended UI benefits are still necessary
Is the federally funded extended UI benefits program still necessary more than four years after the recession officially ended, in June 2009? Absolutely. There are 4.1 million workers who have been unemployed for more than six months, which is well over three times the number of long-term unemployed in 2007, before the Great Recession began. Furthermore, 36.9 percent of unemployed workers have been unemployed for more than six months, a share nearly 20 percentage points higher than the 2007 average of 17.5 percent. The labor market still faces a profound long-term unemployment crisis due to the damage inflicted by the Great Recession.
That unemployed workers continue to face extremely long spells of unemployment is no surprise given how dramatically unemployed workers outnumber job openings. The ratio of unemployed workers to job openings is 2.9-to-1, as high as the highest the ratio ever got in the early 2000s downturn. A "job-seekers ratio" of 2.9-to-1 means that for nearly two out of every three job seekers, there simply are no jobs. In other words, in a given month in today's labor market, the vast majority of the unemployed are not going to find a job no matter what they do...