Millions of Americans set to lose unemployment benefits during holiday season

Published: Wednesday, Nov. 28 2012 10:00 a.m. MST

People wait to talk to unemployment benefits staff at an Employment Development Department office in San Jose, Calif. on Jan. 23.

Marcio Jose Sanchez, Associated Press

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Millions of jobless Americans will lose their federal unemployment insurance during the holidays if Congress doesn't extend the deadline to file for extended benefits, reports CNN Money.

This is problematic because unemployment benefits are the only thing standing between many Americans and poverty. "In 2011 alone, unemployment insurance supported 26 million workers and their families, lifting 2.3 million people out of poverty, including more than 600,000 children. Unemployment insurance reduced the poverty rate on families receiving it by 40 percent," according to research by the National Employment Law Project.

While the number of Americans in poverty grew by 2.3 million from 2010 to 2011, unemployment insurance prevented an additional 2.3 million Americans from joining their ranks, the group said.

"Unemployment insurance is generally handled by the states, but because long-term unemployment was exacerbated during the Great Recession, Congress enacted the Emergency Unemployment Compensation program in 2008," according to Travis Walderon of ThinkProgress. If the federal program isn’t extended by the end of the year, 2 million Americans could lose benefits and another 1 million will join them in the early part of 2013.

Some in Congress have pushed against extensions in past years, arguing the benefits create a culture of dependency. For example in a 2011 floor speech, Rep. Steve King (R-Iowa) railed against safety net spending, saying it has created "a nation of slackers" because it reduces the incentive to find work.

While people might disagree about the best use of government money, the argument that unemployment insurance disincentivizes job seeking doesn't hold up to scrutiny, according to a recent study. The federal program requires recipients to search for jobs. The study, by the Congress Joint Economic Committee, indicated that recipients of unemployment benefits look harder for jobs than those who don't receive benefits.

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