Unemployment Benefits Cost $520 Billion in Five Years

November 29, 2012 by Trey Thoelcke

Unemployment benefits have cost the federal and state governments $520 billion over the past five years, another indication that the cost to create jobs may be less than to sustain incomes for those who do not have them.

In a new report, the Congressional Budget Office writes:

The unemployment insurance (UI) 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. CBO estimates that UI benefits totaled $94 billion in fiscal year 2012 (when the unemployment rate was 8.3 percent, on average), a substantial increase over the $33 billion paid out in fiscal year 2007 (when the unemployment rate was 4.5 percent, on average)

And:

In particular, the periods for which eligible workers can receive UI benefits have been repeatedly extended during the recent recession and its aftermath. Regular UI benefits generally last up to 26 weeks. Additional weeks of benefits have been provided through the creation of the temporary Emergency Unemployment Compensation (EUC) program in 2008 and through modifications to the extended benefits (EB) program. The EUC program currently provides up to 47 weeks of additional benefits (depending on a state’s unemployment rate) after regular UI benefits have been exhausted. The EB program provides up to 20 weeks of benefits to certain eligible workers who have exhausted their EUC benefits (temporary changes in law have made it easier for states to qualify to provide extended benefits and have made the funding for the EB program entirely federal).

Finally:

The benefits the three programs provide — at a total cost over the past five years of roughly $520 billion — have allowed households to better maintain their consumption while household members are unemployed. Under current law, the temporary benefits that have been provided in recent years are set to expire at the end of December 2012.

Douglas A. McIntyre

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