Length of Unemployment at All Time High

Sean Brandon, InternBy Sean Brandon, Intern

While the U.S. unemployment rate fell to a 32-month low of 8.6% in November, the average duration of joblessness hit an all-time high — 40.9 weeks. This number has more than doubled since the start of the Great Recession in December 2007. Nevertheless, it should come as no surprise amid lingering unemployment. There are four job seekers for every job opening these days.

With long-term unemployment at its historic worst, Congress must decide whether or not to continue federally-funded extended unemployment insurance benefits that are scheduled to begin phasing out at the end of this month

Should Congress fail to act, 281,000 jobless Pennsylvanians will lose their unemployment benefits between December and June, with the bulk of benefits expiring in the first quarter of 2012, according to the Pennsylvania Department of Labor and Industry.

This should concern each and every taxpayer because unemployment insurance serves two vital purposes.

First, these benefits go to individuals and families who have suffered through the longest and deepest economic downturn since the Great Depression. As a society, the more fortunate have a moral obligation to help the less fortunate in their time of need. The money is being spent on necessities like rent, utilities, food, and clothing — not Cadillacs.

The second point is an echo of the first — money is being spent in the economy. Those eligible for extended unemployment insurance are cash-strapped and immediately spend their benefits to pay for rent, groceries and other necessities. Spending in our economy creates jobs. This is why many economists regard government spending on unemployment insurance as an effective means to both support and create jobs for the unemployed.

A policy brief from the Economic Policy Institute estimates that continuing extended unemployment benefits through 2012 would increase the U.S. Gross Domestic Product by $72 billion while only costing $45 billion. The extension is also expected to save or create 560,000 jobs, boosting tax revenue that will cover $26 billion of the cost of extending benefits.

Opponents contend that extended unemployment insurance creates a disincentive for unemployed workers to return to work. In a recent study titled Unemployment Insurance and Job Search in the Great Recession, author Jesse Rothstein finds that only one and half out of every 100 workers delay taking a job to remain on unemployment. In other words, any disincentive to work from extended benefits is a tiny factor in driving up unemployment. For the vast majority of people who are unemployed, it's about the lack of jobs.

President Obama has called for the extension of unemployment insurance benefits for the long-term unemployed through the end of 2012. Now we're waiting on Congress to act.

The U.S. has never failed to extend unemployment insurance with the jobless rate this high. Now would be a terrible time to start.

Sean Brandon served as an intern with the Keystone Research Center and Pennsylvania Budget and Policy Center in 2010 and 2011. Read Sean's bio.

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