A study released by the Economic Policy Institute (EPI) finds that 400,000 jobs could be lost if Congress fails to extend the federally funded extended Unemployment Insurance (UI) benefits program when it expires at the end of 2012. Unemployment benefits not only provide a lifeline to unemployed workers struggling to get by, but also provide critical support for the economy. According to EPI, “economists widely recognize that extending unemployment benefits is one of the most effective tools for generating jobs in a downturn” because cash-strapped jobless workers immediately spend their UI benefits, and this spending generates activity throughout the economy. EPI finds that if Congress refuses to extend UI, the unemployment rate will be 0.3% higher next year than it will be if Congress continues the program.
The EPI report also explains that UI benefits are still critically necessary because long-term unemployment is still alarmingly high and there are not enough jobs available to put all the long-term unemployed back to work:
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 ([Heidi] 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.
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