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Federal Unemployment Benefits, Supersized

October 30, 2013

In the wake of recessions, the Federal government typically creates a “temporary” Federal unemployment benefits program for long-term unemployed workers who have exhausted up to 26 weeks of State UI benefits.  This recession has been no different. The current “temporary” program, called Emergency Unemployment Compensation or EUC, began in July 2008, shortly after the recession officially started in December 2007.  As the table below shows, similar programs were created in the wake of recessions in 2001, 1991, and 1982.  

But that’s pretty much where the similarities end.     

The current EUC program already has served up about 10 times as many weeks of Federal extended benefits as the most recent program that operated in the wake of the 2001 recession and terror attacks, and nearly six times as many weeks as the program that ran from 1991 through 1994.  That’s just through July 2013, with tens of millions more weeks of checks to be added before the EUC program’s expiration in December 2013.  EUC’s $252 billion in spending through July also dwarfs any prior program – already spending $200 billion more than any recent program, in inflation-adjusted dollars.

And despite Democrat claims that such spending on UI benefits is the “best stimulus,” all this record-setting benefit spending has bought is the slowest recovery on record.  Perhaps not surprisingly, a new study identifies the EUC program as the cause of the painfully slow labor market recovery – as employers have withheld new job offers until after the Federal extended benefits program ends.  Another study reinforces that such programs have been behind recent jobless recoveries.

This program — which has already added too much to the deficit, and helped keep unemployment too high for too long – should be allowed to finally come to an end.      

Comparing the Last Four Federal Temporary Unemployment Benefit Programs

 Total Recipients
 8 million
 9 million  8 million  24 million
Average Weeks of Benefits Per Recipient
12 38
Total Weeks Claimed
 76 million
  151 million
  89 million
 881 million
 Total Benefits Paid (2013$)
 $22 billion
 $46 billion
 $28 billion
 $252 billion

*Through July 2013
Totals may not add due to rounding.