How Helpful Was the Emergency Unemployment Benefits Program?

Federal policymakers supporting the EUC programs had claimed that the EUC benefits would “grow the economy,” with the president suggesting it would help create 3.5 million jobs and reduce the U.S. unemployment rate to 5% by 2013.

However, despite the  magnitude of the EUC program compared to the ones prior, the recent recession was the first in which the nation failed to recover all the jobs lost within three years of implementing the EUC.

Some researchers at the University of Pennsylvania believe the EUC program actually hurt the economy recovery. They claimed extended unemployment benefits had a “dramatic negative effect on employment.”

According to the Penn researchers, the dramatic increases in employment taxes levied on businesses for such an extended period of time made businesses less able to afford to hire employees.

More reasons to question the EUC program were found after it expired.

Comparing data from the seven months before the EUC program expired in December 2013 with the seven months after it expired, the Penn researchers found that, post-EUC, “employment growth more than doubled, job growth accelerated, the labor force participation rate started rising after previous falling, and average and median durations of unemployment dropped rapidly after previously rising.”

This is attributable to states taxing employers less once their federal unemployment tax debts were repaid, as well as employers being more likely to hire unemployed individuals that had been out of the workforce for shorter periods of time.

Even so, the report is supportive of temporary EUC programs as long as they return to their “timely, targeted, and temporary roots” in lieu of the long running and larger program in effect between 2008 and 2013.

For more information, contact CBIA’s Eric Gjede at 860.244.1931 | eric.gjede@cbia.com | @egjede