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Thursday, December 8, 2016

The percentage of unemployed workers receiving unemployment insurance (UI) has reached its lowest point since 1987, according to the Economic Policy Institute.

During the Great Recession, which technically ended in 2009, unemployment spiked. As the EPI reports, “the UI recipiency rate reached about two-thirds of all unemployed workers” during this time.

The number of people receiving UI then fell precipitously in 2012 and 2013, because of unusually long-lasting unemployment bouts and cutbacks to UI funding made at both the state and federal levels. Throughout most of the economic downturn, Emergency Unemployment Compensation (EUC) made it possible for the unemployed to receive additional benefits. UI usually lasts for 26 weeks, but the EUC program allowed unemployed workers to collect UI for at least seven additional weeks (sometimes longer, depending on the state). However, this program ended in December 2013, after Congress refused to pass legislation to extend it.

Many conservatives believed that ending long-term unemployment insurance would benefit the unemployed.

“When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,” Senator Rand Paul (R-KY) claimed in December.

The evidence strongly disputes this claim.

Republicans often cite recent job growth as proof that their opposition to extending long-term unemployment benefits is correct. However, experts believe that job growth has prevailed in spite of — not because of — ending the benefits. The number of long-term unemployed dropped this summer, but there are still 3.1 million Americans who do not qualify for UI looking for work. That number is over 30 percent of the nation’s total unemployment rate. To make matters worse, the recent drop in the number of long-term unemployed can be explained by the surrender of those unemployed workers.

Alan Krueger, a Princeton professor and former member of the Obama administration, conducted a study that found that between 2008 and 2013, only 22 percent of long-term unemployed workers had found a full-time job, while 35 percent had stopped looking for work. This resignation is understandable considering that, as of July, job openings were available for less than half of all job seekers.

Data Viz LTUE  KruegerCramerCho  01
Photo via Brookings.edu

The historically small share of jobless people receiving UI means that many of those who cannot find work (or have given up doing so) are receiving no aid.

This could be harming the economy. The Congressional Budget Office has long said that extended benefits boost the economy by increasing consumer spending. The UI system also helps sustain consumer demand through periods of economic downturn by providing money for families to spend.

Photo via Flickr

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