Three Reasons to Continue Unemployment Benefits

Unemployment inched up in November to 9.8 percent from 9.6, according to the Bureau of Labor Statistics. The number of unemployed persons was 15.1 million in November. Among the major worker groups, the unemployment rates for adult men (10.0 percent), adult women (8.4 percent), whites (8.9 percent), and Hispanics (13.2 percent) edged up in November. The jobless rate for African Americans (16.0 percent) showed little change over the month. With these figures in mind, Decisive editors bring you this vital information from the Center for American Progress,

By Heather Boushey, Jordan Eizenga

Businesses can expect a dreary holiday shopping season if Congress does not continue benefits for the long-term unemployed. These benefits help families weather hard times, and right now millions of American families remain out of work or underemployed. They help families keep a roof over their head and food on the table while they search for work and wait for the economy to improve.

1. Retailers report that benefits matter to sales.

Unemployment insurance (UI) and Supplemental Nutrition Assistance Program (SNAP) put money in the pockets of families facing unemployment who tend to spend many of these dollars in their local community on housing, food, and other basics. Retailers cannot keep tabs on how many of their customers receive unemployment insurance, but they do know how many customers use SNAP.

Two grocery chains report in interviews with the Center for American Progress that SNAP benefits now account for about a fifth (18 percent to 23 percent) of their total sales and support between 300 and 2,300 jobs depending on the grocery chain.

2. Unemployment benefits stabilize the economy.

UI, along with SNAP (formerly known as food stamps), stabilize the economy by increasing the demand for basic goods and services. Stabilizing demand remains critical to saving and creating jobs and boosting earnings at this point in the economic recovery. If Congress allows benefits for the long-term unemployed to expire at the end of November, this could potentially reduce the gains in retail sales in December by 14 percent compared to December 2009.

3. UI and Snap keep families out of poverty.

During the Great Recession, unemployment insurance and SNAP have kept families out of poverty and as a result boosted sales and steadied the economy as families are able to keep up with their mortgages and rent and afford necessities even as they face high unemployment. The UI system pulled 3.3 million people— including 1 million children—out of poverty in 2009 alone. This is more people than the entire population of the Chicago metropolitan area. Food stamps alone lifted 2.4 million children out of “deep poverty,” which is greater than the number of children living in all of Los Angeles County.

Congress is debating whether to continue to fund UI for the long-term unemployed. If they do not, two million jobless workers will lose their long-term UI benefits at the end of November.

Of this group, 1.2 million will exhaust their 26 weeks of regular unemployment insurance benefits without finding work and be out on their own. Others are currently receiving UI through the Emergency Unemployment Compensation program, which provides an additional 34 to 53 weeks of unemployment benefits above regular benefits. They will see those benefits expire over the course of the month.

The other 800,000 workers will experience an immediate loss of their Extended Benefits. The Extended Benefits program provides between 13 and 20 additional weeks of unemployment benefits to the long-term unemployed; but in 39 states, funding comes from the legislation set to expire on November 30.

Because of historically high shares of workers out of work and searching for a job for more than six months the value of the benefits to the long-term unemployed is now greater than the total benefits paid out to those who have been out of work for six months or less. This means that more so than before the long-term unemployed’s benefits comprise a critical component of an effective fiscal stimulus, as well as helping those who have been hit hardest by the Great Recession.

The Center for American Progress is a nonpartisan research and educational institute dedicated to promoting a strong, just and free America that ensures opportunity for all.