The Emergency Unemployment Program Has Ended. The Unemployment Emergency Hasn't.

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Chief Economics Writer at FiveThirtyEight

 

 

The recession has been over for nearly five years, the unemployment rate is down to 6.3 percent and job growth is showing some signs of accelerating. But the recovery hasn't reached the long-term jobless.

The crisis of long-term unemployment has faded from the headlines, but it remains one of the most important -- and worrisome -- issues in the U.S.'s long, slow emergence from the Great Recession. It's particularly relevant now because in January, some 1.3 million Americans saw their jobless benefits disappear overnight when Congress allowed the Emergency Unemployment Compensation program to expire. The Senate recently voted to renew the program, which extended benefits beyond the six months offered in most states, but the House doesn't appear likely to follow suit.

The decision to let benefits expire rested on two core arguments: that the economy is improving, so the extra benefits were no longer necessary, and that the program was doing more harm than good by discouraging recipients from working. But ts I wrote onFiveThirtyEight today:

The evidence doesn’t support either of those arguments. The economy has indeed improved, but not for the long-term unemployed, whose odds of finding a job are barely higher today than when the recession ended nearly five years ago. And the end of extended benefits hasn’t spurred the unemployed back to work; if anything, it has pushed them out of the labor force altogether.

The first point has been well-documented. Back in March, I wrote about research that found the long-term unemployed are being left behind by the economic rebound. I updated that story today with a chart showing how the long-term jobless have seen hardly any improvement in their chances of finding a job.

The second point is trickier. The government doesn't directly track what happens to people when their benefits get cut off. But I dug into the data that do exist, and found that there's scant evidence that people who lost benefits have responded by returning to work. Some have abandoned their job search now that they're no longer receiving benefits. Most are continuing to look for work.

None of this should come as a big surprise. Recent economic research has reached much the same conclusion, finding that unemployment benefits do little to discourage people from working. Other research has looked at what happens when benefits run out. The short answer: Their income goes down.

That's what happened to Helene Laurusevage, who lost her job in April of last year and has been looking for a job ever since. Benefits helped her scrape by. Now that lifeline is gone.

“We are about to go under,” Laurusevage told me. “My entire savings account is gone. Everything I spent years to save is gone.”

Read more about Laurusevage's story, and my research on what's happening to people who have lost benefits, on FiveThirtyEight.

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