- Economic Policy Institute projects that extension of unemployment insurance would create a substantial income boost which would improve GDP and preserve or add 5.1 million jobs
- A $600-a-week supplemental benefit ceased during the summer, and two additional federal unemployment programs will end this month
- Projected effect varies by state, with unemployment extension assisting an estimated 52,000 jobs in Connecticut
A think tank report is suggesting that a continuance of unemployment insurance programs in the United States that have lapsed or are set to expire this month would help boost the economy and add or preserve millions of jobs.
The Economic Policy Institute says that while there has been a strong rebound in the labor market since widespread lockdowns implemented in the spring, the U.S. economy remains 10 million jobs below pre-pandemic levels and hundreds of thousands of people are seeking unemployment benefits as companies continue to shed jobs. Two federal unemployment programs are set to expire on Dec. 26, and EPI says an estimated one-third of unemployed workers have been out of a job for 27 weeks or longer.
A supplemental $600-a-week unemployment benefit established under the CARES Act expired at the end of July. EPI notes a separate report indicating that 12 million workers are projected to be on the Pandemic Unemployment Compensation program, which covers contractors and others typically ineligible for state benefits, and the Pandemic Emergency Unemployment Compensation program, which provides up to 13 additional weeks of benefits, when the programs expire. An estimated 4.4 million will have already used up their benefits under those programs by that point.
The report says slowing momentum in job recovery, surging COVID-19 infections, and uncertainties over how well businesses can weather the winter could mean it will take years for the labor market to return to pre-pandemic levels. It suggests that if the federal unemployment programs are extended into 2021, it would result in a collective $441 billion boost to Americans’ spending power. Assuming the pandemic is brought under control through vaccine distribution next year, EPI estimates that the increased economic security provided by the extended benefits would boost GDP by 3.5 percent and add or preserve 5.1 million jobs.
Restoring the $600-a-week benefit would have the greatest effect, accounting for an estimated 2.3 percent GDP boost and 3.3 million jobs. The estimated effect of the benefits varies by state, with the most populous states and those hardest hit by the pandemic seeing the most positive impact. EPI estimates an estimated 52,000 jobs in Connecticut would be created or saved.
Congress has not reached a consensus on a new economic stimulus package, though there is broad support for a restoration of enhanced unemployment benefits. A proposed $908 billion package, which has gained the support of Democratic leaders and is gaining traction among Republicans, would put $180 billion toward an additional $300-a-week unemployment benefit.
