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Not extending EUC hurts long-term unemployed.

  ·   By Bryan Wilson,

A new report released yesterday by the White House Council of Economic Advisors, “The Economic Benefits of Extending Unemployment Insurance,” identifies the benefits that would be lost if the Emergency Unemployment Compensation (EUC) Program, which allows additional weeks of unemployment insurance (UI) benefits for unemployed workers who are unable to find new employment prior to the exhaustion of the regular benefit period, is allowed to expire. The report finds that allowing EUC to expire on December 28 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.

During economic downturns, Congress has offered extended UI benefits in recognition that when the number of unemployed workers exceeds greatly the number of job openings, many long-term unemployed workers remain unemployed through no fault of their own. Historically, Congress has renewed the program when the unemployment rate has remained high. Congress has always renewed the program when unemployment is as high as it is today.  

UI benefits help unemployed workers and their families, as well as the broader economy. Since the recession began, nearly 24 million workers have received extended UI benefits. Including workers’ families, nearly 69 million people have been supported by the benefits, of which 17 million are children. In 2012 alone, UI benefits lifted an estimated 2.5 million people out of poverty. If the program is allowed to end, 1.3 million workers would lose their benefits by the end of the year.

In previous years, EUC was structured so that benefits ramped down slowly after the program expired. This meant that even when Congress missed the deadline to extend EUC, most long-term unemployed individuals continued receiving benefits until Congress eventually reauthorized the program. 

Unfortunately, this year EUC benefits will end immediately if the program is allowed to expire. Even if Congress ultimately agrees to extend the program in 2014, individuals who lose their eligibility would be without access to any EUC benefits for the duration of the program lapse. Therefore it is more important than ever that Congress act now to extend EUC and not allow the program to expire even temporarily at the end of the year. 

Workers receiving UI benefits tend to immediately put the money back into the economy. This increase in consumer spending grows the economy and creates jobs. If benefits are not extended, it would cost an estimated 240,000 jobs and reduce the annual gross domestic product by between .2 and .4 percentage points. And it would result in workers taking low-wage, low-skill jobs instead of gaining new skills for family-supporting jobs.

View the full report and state by state impacts