An Unemployment Insurance Extension is not as “Empathetic” as Harry Reid Suggests

“I hope a few reasonable and empathetic Republicans will… help us advance [the unemployment insurance extension] bill today,” said Sen. Harry Reid (D-NV) 13% on the Senate floor Monday, as he championed the Emergency Unemployment Compensation Extension Act (S.1845), which is up for a procedural vote Monday evening.  The bill would cost $6.6 billion in federal taxpayer dollars.

Reasonable minds can differ, but Mr. Reid’s implication is that the “reasonable,” “compassionate,” and “empathetic” move here is necessarily to pass the Emergency Unemployment Compensation (EUC) program extension.

Mr. Reid did what he could to make an emotional case for this bill, and he did so quite effectively, if evoking an emotional response was his goal.

We have never had so many unemployed for such a long period of time.  The long-term unemployment rate is twice as high as it was any other time we’ve allowed emergency unemployment benefits to end.  It would be catastrophic for men and women, boys and girls, for this to happen.  What’s more, failing to extend unemployment insurance won’t just be a hardship for out-of-work Americans, it will be a drag on our economy. 

He rightly points out how poor our economy is and how high unemployment has been for far too long under President Obama’s leadership, but he is mistaken to suggest the appropriate solution is to extend unemployment benefits to 73 weeks — an increase of 47 weeks from the current 26.  Doing so will help neither the economy or unemployed individuals.

Mr. Reid went on to cite a statistic that for every dollar the federal government spends on unemployment insurance, the gross domestic product is increased by $1.50.  But the Heritage Foundation explains extending UI benefits is an ineffective economic stimulus:

The studies that conclude that UI benefits boost the economy ignore their effect in raising unemployment and incorrectly assume that unemployed households spend every dollar of UI benefits they receive. Empirical studies contradict both of these assumptions.

Arguments can be made for extending unemployment benefits on humanitarian grounds, as Heritage also explains, but there are policy tradeoffs, and some of those tradeoffs come in the form of harm to the unemployed themselves.

Extending these benefits for excessive amounts of time — as is being proposed with the bill in question — would actually result in higher and longer unemployment.  Extending UI benefits reduces the need to look for new work.  They also reduce the pressure the unemployed have to make changes that would increase their prospects of employment, such as moving or switching industries.

Lawmakers should also consider the burden placed on those who do have jobs and are working to provide for their families while footing the $6.6 billion bill that this legislation would impose on them.


Extended Unemployment Insurance Benefits

Emergency Unemployment Benefits Brief

“NO” on Unemployment Insurance Extension


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