End of UI extensions / Labor market would lose 400,000 jobs in 2013

Federally funded extended unemployment insurance (UI) benefits are set to expire at the end of this year. 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.1 Less understood but equally crucial, the UI benefit extensions boost spending in the economy and thereby create jobs. We find that continuing the extensions through 2013 would generate spending that would support 400,000 jobs. If this program is discontinued, the economy will lose these jobs.

Is the federally funded extended unemployment insurance (UI) benefits program still necessary more than three years after the recession officially ended, in June 2009? Absolutely. There are 5 million workers who have been unemployed for more than six months, which is more than four times the number of long-term unemployed in 2007, before the Great Recession began. Furthermore, 40.6 percent of unemployed workers have been unemployed for more than six months, a share more than 20 percentage points higher than the 2007 average of 17.5 percent. The labor market still faces a profound long-term unemployment crisis due to the damage inflicted by the Great Recession.

That unemployed workers continue to face extremely long spells of unemployment is no surprise given how dramatically unemployed workers outnumber job openings. The ratio of unemployed workers to job openings is 3.4-to-1, and has been 3-to-1 or greater since September 2008 (Shierholz 2012). A “job-seekers ratio” of more than 3-to-1 means there are simply no jobs available for more than two out of three 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 unlikely to improve much in the next year: Moody’s Analytics projects an average unemployment rate of 7.8 percent in 2013, which is higher than the highest unemployment rate of the early 2000s recession and equal to the highest unemployment rate of the early 1990s recession (Moody’s 2012). More than 5 million jobless workers will be unable to collect federal UI benefits next year if federal benefits are not renewed (NELP 2012). This is no time for Congress to turn its back on the long-term unemployed…

Choosen excerpts by JMM from

via Labor market will lose 400,000 jobs in 2013 if UI extensions expire | Economic Policy Institute.