Washington, D.C. -- Today, the
U.S. Congress Joint Economic
Committee (JEC) released a report showing that the federal government could
save more than $23 billion by extending unemployment benefits.
The report, entitled
“Extending
Unemployment Insurance Benefits: The Cost of Inaction for Disabled
Workers,” focuses on labor force participation for unemployed disabled
workers. In the absence of extending the unemployment benefits program,
these workers would likely drop out of the labor force and turn to Social
Security Disability Insurance (SSDI), which would cost the federal government
$24.2 billion. In contrast, the cost of keeping these workers attached to
the labor force by extending unemployment benefits and COBRA premium subsides
would be only $721.3 million in 2010 (
see
chart).
“Extending unemployment benefits provides an immediate positive jolt to the
U.S. economy because unemployed individuals spend the money quickly – to put
food on the table, pay rent or their mortgage, and clothe their children.
Every dollar of unemployment benefits multiplies into $1.60 of economic
activity,”
said Congresswoman Carolyn Maloney, Chair of the JEC.
“This report highlights the cost of inaction as it relates to disabled
workers. Not only is an extension of unemployment benefits the morally
right thing to do, it is fiscally responsible, especially when you look at
unemployed disabled workers.”
Charles E. Schumer, Vice Chair of the JEC, said, “If anyone still wasn’t
convinced that unemployment benefits are a sound investment that gets a good
bang for the buck, this report removes any doubt. In addition to being
the right thing to do for those who are out of work through no fault of their
own, extending these benefits also makes good economic sense. As the
evidence shows, it more than pays for itself. We will be pushing to
extend these benefits through the end of the year shortly in the Senate.”
The JEC estimates that a failure to extend unemployment insurance benefits
would result in nearly 290,000 disabled unemployed workers exhausting
unemployment benefits in 2010. The majority of these disabled exhaustees
are likely to turn to the SSDI program for economic support. These SSDI
recipients are likely to remain permanently on disability rolls, even after
economic conditions improve.
This is a costly proposition, especially because SSDI recipients become
eligible for Medicare benefits after two years on the disability
insurance. The JEC estimates the lifetime cost of providing disability
benefits to individuals pushed out of the labor market by the failure to extend
unemployment benefits is over $24.2 billion.