Press Releases

JEC Report Shows Extending Unemployment Insurance Benefits Program Critical to Economic Recovery

Nov 18 2010

Washington, DC
– A new report by the U.S. Congress Joint Economic Committee (JEC) finds that prematurely ending the federal unemployment insurance benefits program would drain the economy of $80 billion in purchasing power and result in the loss of over one million jobs over the next year.

The report, “Extending the Federal Unemployment Insurance Benefits Program: Critical to Keeping the Economic Recovery On-Track,” further shows that ending the federal unemployment program with the unemployment rate at 9.6 percent would be a radical departure from past federal action. Over the past six decades, as the economy has recovered from recessions, the temporary federal program has been kept in place until the economy has gained strength and job prospects have improved -- the highest unemployment rate at which federal unemployment benefits was cut off was 7.4 percent. 

“Cutting off federal unemployment benefits with the unemployment rate well over 9 percent would remove a key form of fiscal stimulus when it is still needed.  With nearly one in ten Americans unemployed, such a move would be unprecedented and unwise,” said Congresswoman Carolyn B. Maloney, Chair of the JEC. “According to the nonpartisan Congressional Budget Office, unemployment insurance is one of the most powerful and effective tools we have for boosting economic growth.  Ending federal unemployment insurance would not only harm millions of families who count on these benefits to make ends meets, it would also jeopardize our fragile recovery by prematurely withdrawing a key source of growth and job creation.”

If the federal unemployment benefit program is not extended, millions of unemployed workers will lose their benefits.

  • Nearly 2 million unemployed Americans who have been out of work for more than 26 weeks and are receiving federal benefits right now will lose those benefits in December if the program is cut off.
  • For the recently unemployed who are still receiving state rather than federal unemployment benefits, the expiration of the program would mean that for most workers, unemployment benefits will stop as soon as they enter their 27th week of unemployment.  Currently, more than 40 percent of the unemployed have been out of work for 27 weeks or more.

The report also finds:

  • Workers receiving unemployment benefits spend their benefits immediately, creating a “multiplier” for the economy as a whole.  The President’s Council of Economic Advisers estimates that every dollar spent on unemployment insurance benefits increases gross domestic product (GDP) by $1.60.
  • Unemployment benefits do not inhibit individuals’ job search efforts.  Five unemployed Americans exist for every job opening today, which means that individuals who exhaust benefits are unlikely to easily find a new job.
  • In the absence of unemployment benefits, jobless Americans need some form of economic assistance to avoid further economic crisis.  Without private savings to fall back on, many are likely to turn to another social assistance program that may be more costly than unemployment insurance, such as Social Security Disability Insurance.

The report was prepared by the Majority Staff of the JEC.


The Joint Economic Committee, established under the Employment Act of 1946, was created by Congress to review economic conditions and to analyze the effectiveness of economic policy.  

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