Half a Million More Jobs Lost if Unemployment Insurance Extension Expires

Analysis: For many of those seeking jobs in the United States, the reality is that there just aren’t enough jobs, period. As a result, like it or not, unemployment insurance payment are helping to save the nation from losing more than 500,000 additional jobs. Should a Republican-controlled congress decide to not extend unemployment insurance, consumer spending is likely to take a hit, making the unemployment situation worse.

From the Economic Policy Institute:

At the end of this year [2011], federally funded extended unemployment insurance extension benefits are set to expire.

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. The ratio of unemployed workers to job openings is now 4.6-to-1, and has been well over 4-to-1 for the last two years and eight months (Shierholz 2011).

A “job seeker’s ratio” of more than 4-to-1 means there are simply no jobs available for more than three out of four unemployed workers. 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.

Furthermore, the situation is barely improving; the Congressional Budget Office (August 2011) projects an unemployment rate of 8.5 percent in the fourth quarter of 2012, which is higher than the worst months of the last two recessions. This is no time for Congress to turn its back on the long-term unemployed.

Less understood but equally crucial, the UI benefit extensions boost spending in the economy and thereby create jobs. This issue brief calculates how many jobs will be lost in 2012 if the current federally funded extended UI benefits are not extended through the end of next year.

By Heidi Shierholz and Lawrence Mishel, Economic Policy Institute