December 18, 2013
WASHINGTON, DC – In an effort to prevent more than 1.3 million long-term unemployed workers from losing their unemployment insurance after the holidays, U.S. Senators Jack Reed (D-RI) and Dean Heller (R-NV) today introduced bipartisan legislation to preserve federal unemployment insurance (UI) for three months while Congress works out a comprehensive plan.
With just 10 days before federal UI benefits are set to expire, the Senators are seeking to provide some much needed certainty to our economy and ensure vulnerable families will continue to have access to this vital lifeline.
“I hope this sensible and bipartisan approach will provide a path forward to preserving the program through the entire 2014 calendar year, which will give families and our economy time to recover. Because, frankly, this is a program designed to be there for every worker should the unfortunate happen and they find themselves without a job through no fault of their own,” stated Senator Jack Reed. “This program has been, and continues to be, a crucial benefit to millions of American households all over the country and of nearly every conceivable demographic. That is why it’s such a significant part of keeping this economic recovery going forward. Its expiration will hurt families and set back our recovery and cost the economy 200,000 jobs in 2014. So I look forward to working with Senator Heller and urging my colleagues to extend this program because this is not only the right thing to do in terms of the families of America, it is the smart and right thing to do for our economy.”
“Providing a safety net for those in need is one of the most important functions of the federal government. As Nevada’s unemployment rate continues to top the charts nationwide, many families and individuals back home do not know how they are going to meet their basic needs. I am pleased to join Senator Reed on this legislation, which aims to help people across the nation who have fallen on hard times,” said Senator Dean Heller.
Earlier this morning at Politico’s Morning Money breakfast in Washington, DC, senior White House adviser Valerie Jarrett said the Obama Administration strongly supports the Reed-Heller bipartisan UI plan.
The unemployment insurance system is a partnership between the federal government and state governments that provides a temporary weekly benefit to qualified workers who lose their job and are seeking work. The amount of that benefit is based in part on a worker’s past earnings. Rhode Island and Nevada are among 43 states that offer 26 weeks of UI coverage, while 7 states offer fewer weeks.
The extended federal UI program was signed into law in June 2008 by President George W. Bush, when the national unemployment rate was 5.6% and the average duration of jobless insurance was 17.1 weeks. It has been reauthorized by Congress a number of times since as America seeks to emerge from the greatest economic recession since the Great Depression. Today, the national unemployment rate is 7% and the average duration of UI benefits is 36.1 weeks, which is much longer than the 26 weeks of unemployment coverage that most states provide.
According to the non-partisan Center on Budget and Policy Priorities (CBPP), the long-term unemployment rate is falling, but it's still at 2.6%, which is twice as high as in any prior month when extended UI benefits were allowed to expire. CBPP economists note that in each of the previous three recessions, federal unemployment assistance didn't end until the long-term unemployment rate had dropped to around 1.3%.
A new study by the Council of Economic Advisers and the U.S. Department of Labor estimates that the failure to renew UI could cost our economy 240,000 jobs in 2014, including 1,284 in Rhode Island and 2,953 in Nevada.
Over the years, the non-partisan Congressional Budget Office (CBO) has found that preserving UI benefits during periods of historically high unemployment is among the most cost-effective programs for reducing joblessness and stimulating the economy. Recently the CBO reported: “Extending emergency unemployment benefits would raise gross domestic product (GDP) and employment in 2014 relative to what would occur under current law. Recipients of the additional benefits would increase their spending on consumer goods and services. That increase in aggregate demand would encourage businesses to boost production and hire more workers than they otherwise would, particularly given the expected slack in the capital and labor markets.”