Report | Inequality and Poverty

Unemployment Insurance Extension Passes Senate, 75 to 22

Policy Memo #125

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On Thursday, the Senate passed, by a veto-proof margin, an amendment to the war supplemental appropriations bill that included emergency extensions to unemployment insurance (UI). The provision—similar to actions taken during previous recessions—extends unemployment benefits by 13 weeks for all workers nationwide, and an additional 13 weeks for workers in high-unemployment states. The measure now returns to the House of Representatives, where it must also pass by a two-thirds margin to override a threatened presidential veto.The extension is crucial during the current economic downturn, both for the long-term jobless and for the economy.

  • Currently, more than 1 million workers have exhausted their 26 weeks of regular UI benefits and remain unemployed. By next year, that number is likely to grow by an additional 3 million. Thus, the extension would help ease an enormous strain for more than 4 million jobless workers and their families who are most hurt by the economic downturn.1
  • Unemployment Insurance is excellent economic stimulus. The Congressional Budget Office has estimated that, once up and running, a national UI extension would put more than $1 billion per month in the hands of jobless workers and their families. Furthermore, Mark Zandi of Economy.com estimates that every dollar spent on unemployment insurance boosts the economy by $1.73.2 UI stimulus is effective because the long-term unemployed, who are likely to have depleted their savings, tend to quickly spend every dollar they receive on necessities. Thus, extending UI benefits will give the sagging economy a more than $1.7 billion boost per month.

For more information, please see Shierholz’s testimony to a Congressional subcommittee on April 10.

Notes
1. National Employment Law Project, based on data from the Department of Labor

2. Congressional Budget Office, “Options for Responding to Short-Term Economic Weakness,” January 2008, and M. Zandi, “Assessing President Bush’s Fiscal Policies,” Economy.com, July 2004.


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