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Cutting off unemployment benefits may lead to employment

Published: Monday, May 26 2014 12:33 a.m. MDT

Some argue cutting off unemployment benefits leads to more employment.

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Some argue that if people get unemployment benefits for too long, they are less likely to seriously look for a job.

The standard length of time unemployment benefits are offered in the United States is 26 weeks, but in the wake of the recession, those benefits were lengthened by the Emergency Unemployment Compensation to various levels, depending on different factors.

Sen. Jack Reed, a democrat from Rhode Island, said in a press release that "Nearly 2.8 million Americans have already lost emergency unemployment insurance coverage since the program was cutoff on December 28, 2013 and 72,000 additional individuals will continue to lose their coverage for every week the House fails to act."

Diana Furchtgott-Roth at Real Clear Markets argued that letting the unemployment benefits die and stay dead would boost the economy and increase the number of people looking for and finding jobs. "Americans who are employed or looking for a job rose four tenths of a percentage point between December and March, one of the fastest increases since the beginning of 2010," she wrote in April. "The number of unemployed out of work for more than 26 weeks declined by 110,000. One of the reasons was undoubtedly the end of emergency unemployment benefits."

On the other hand, Steve Benen at MSNBC quoted Labor Secretary Thomas Perez who believes the Emergency Unemployment Compensation is "itself an effective job creation tool."

Ben Casselman at FiveThirtyEight said that of the about 1.3 million people who lost benefits at the end of the program in December, three months later 24 percent had a job, 49 percent were still looking and 26 percent gave up.

"The end of benefits has had at most a small impact on the rate at which workers find jobs," Casselman said. "In 2013, people who likely qualified for emergency benefits had a monthly job-finding rate of 12 percent. In the four months since the program ended, the job-finding rate for likely cutoff victims — people who would likely have qualified for extended benefits if the program had been renewed — was slightly higher, at 14 percent. But the difference isn't statistically significant."

He said the slight bump could be more the economy improving than an effect of benefits ending.

Ironically, Casselman said the end of the benefit might push some people to give up looking for work since "unemployment programs usually require recipients to show that they're actively applying for jobs."

Email: mdegroote@deseretnews.com

Twitter: @degroote

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