At the end of 2013, an emergency unemployment compensation extension program that started in 2008 under President George W. Bush expired, meaning 1.3 million jobless workers lost benefits that helped them house and feed their families. President Barack Obama and congressional Democrats have made it clear they want the program to go on, but House Republicans are refusing to act. Now Harvard economist Lawrence Katz says the "fiscally irresponsible" decision is costing America's economy at least $600 million a week.
“It is actually fiscally irresponsible not to extend unemployment benefits,” Katz said. “The long-run cost to the taxpayers will be much higher from disconnecting people from the labor market.”
The program provided an average weekly payment of $305 to people who have been unemployed for longer than six months. The end of the program directly harms the economy because unemployed workers spend most, if not all, of the income they have as soon as they get it. The failure to extend the program not only is a major problem for the families directly involved and a drag on the economy, it will cost over 300,000 jobs if a solution isn't found, according to the Economic Policy Institute.
Labor Secretary Thomas Perez explained the need for the emergency program to continue:
When Congress first passed this version of emergency unemployment compensation in 2008, and the president [George W. Bush] signed the law, the unemployment rate was 5.6%, and the average duration of unemployment was 17.1 weeks. Today, the unemployment rate is 7%. The average duration of unemployment is now 36 weeks.
The administration also noted that the long-term unemployment rate, the percentage of the workforce that has been looking for work for 6 months or longer, is more than 2.5%, well above the 1% economists say we should expect during normal times.
Sens. Jack Reed (D-R.I.) and Dean Heller (R-Nev.) have introduced a bill to extend the program and a test vote is expected as early as today. Senate Majority Leader Harry Reid (D-Nev.) said he is hopeful that enough Republicans will support the bill that an expected filibuster could be overcome. “They’re weighing it,” he said of Republicans. “That is my sense. They understand that they have constituents who worked hard, got laid off and are still looking for work.”