As Congress comes back to work this week, it’s expected to debate the possibility of re-instating unemployment benefits for the long-term unemployed, which expired for 1.3 million people a few days after Christmas.
Research shows that when unemployment benefits get cut, the unemployment rate goes down — but not just because some people take new jobs. Some of the reduction is the combination of bad news and a quirk of how the numbers get compiled.
The bad news is, when benefits go away, some people give up on finding a job, since an active job search is a requirement for collecting benefits.
And the quirk is, when people stop looking for work, they stop getting counted as “unemployed.”
“When people give up and drop out of the labor force, that lowers the unemployment rate — but that’s not a good way of lowering the unemployment rate.” says Chad Stone, chief economist for the Center on Budget and Policy Priorities. “It’s not that they’re transitioning into jobs — it’s that they’ve stopped searching.”
And people without work — and without unemployment benefits — can’t necessarily get what they need from the local food bank.
“What we’re seeing is, charities are not really able to keep up with the increased demand, with more and more people unable to make ends meet,” says Melissa Boteach of the Center for American Progress.
She says the price tag for reinstating benefits — $25 billion — far outstrips what charities could supply. According to her group’s analysis, it’s five times the amount anti-hunger charities collect in a year.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.