WASHINGTON - Ways and Means Committee Ranking Member Sander Levin (D-MI) today made the following statement regarding this morning’s release of a new White House Council of Economic Advisers report : “The Economic Benefits of Extending Unemployment Insurance," which highlights the urgent economic need to reauthorize the federal Emergency Unemployment Compensation program that expires Dec. 28. The report underscores that never before has Congress failed to extend an emergency federal unemployment program when the unemployment rate has been as high as it is today - 7.3 percent. What’s more, the long-term unemployment rate (2.6 percent) is at least twice as high as it was at the expiration of every previous extended UI benefits program. The report concludes that failing to extend the program would cost the economy 240,000 jobs next year, with a state-by-state analysis of the jobs impact. Also, this morning at 10:30 a.m. in Rayburn B-318 House Democrats will hear from unemployed Americans who would be impacted by the failure to extend the program.
“The stakes could not be higher for millions of American families as we near the end of the year," Rep. Levin of the new CEA report. “Never before has Congress failed to provide federal unemployment insurance when the unemployment rate - especially for long-term unemployment - is as high as it is today. The undeniable fact is that millions of Americans are still recovering from the deepest recession most of them have ever seen. Pulling the plug on this program will only further set back the overall national economic recovery."
The CEA report is available here, with the Executive Summary below:
EXECUTIVE SUMMARY
The United States economy continues to recover from the worst economic crisis since the Great Depression, and while substantial progress has been made, more work remains to boost economic growth and speed job creation. Despite ten consecutive quarters of GDP growth and 7.8 million private sector jobs added since early 2010, the unemployment rate is unacceptably high at 7.3 percent, and far too many families are still struggling to regain the foothold they had prior to the crisis.
The Emergency Unemployment Compensation (EUC) program authorized by Congress in 2008 has provided crucial support to the economy and to millions of Americans who lost jobs through no fault of their own. Under current law, EUC will end on Dec. 28, 20131. This report argues that allowing EUC to expire would be harmful to millions of workers and their families, counterproductive to the economic recovery, and unprecedented in the context of previous extensions to earlier unemployment insurance programs.
Since their inception in 2008, extended unemployment insurance (UI) benefits have provided critical support to millions of workers and their families:
• Nearly 24 million workers have received extended UI benefits
• Recipients are a diverse group: roughly half have completed at least some college, including 4.8 million with bachelor’s degrees or higher
• Including workers’ families, nearly 69 million people have been supported by extended UI benefits, including almost 17 million children
• In 2012 alone, UI benefits lifted an estimated 2.5 million people out of poverty
Millions of workers stand to lose access to UI benefits if no action is taken:
• Approximately 1.3 million workers currently receiving extended UI benefits are set to lose them at the end of the year
• 3.6 million additional people will lose access to UI benefits beyond 26 weeks by the end of 2014
Allowing UI to expire would be damaging to the macro-economy and the labor force:
• Failing to extend UI benefits would put a dent in job-seekers’ incomes, reducing demand and costing 240,000 jobs in 2014.
• Estimates from the Congressional Budget Office and JP Morgan suggest that without an extension of EUC GDP will be.2 to.4 percentage points lower.
• In 2011, CBO found that aid to the unemployed is among the policies with “the largest effects on output and employment per dollar of budgetary cost"
• In over a dozen studies, economists have found that any disincentive to find new work that could result from extended UI benefits is, at most, small
• Expiration of extended UI benefits may also lead some long-term unemployed to stop looking for work and leave the labor force, reducing the number who could eventually find jobs as the economy heals
Allowing EUC to expire would be unprecedented in the context of previous extensions to earlier unemployment insurance programs:
• The unemployment rate (7.3% in October) is currently higher than it was at the expiration of any previous extended UI benefits program
• The long-term unemployment rate (2.6% in October) is at least twice as high as it was at the expiration of every previous extended UI benefits program
• Consistent with previous programs, the EUC program has been gradually phasing down - the median number of weeks one can receive benefits across states is down from a peak of 53 weeks in 2010 to 28 weeks currently and 14 weeks under the proposed extension
