Emergency Unemployment Insurance: The Costs


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Unemployment benefits vary significantly per state. Credit: U.S. government.

Unemployment benefits vary significantly per state. Credit: U.S. government.

Each state has its own weekly maximum allowed, decided upon at the state level depending upon their own budgetary limits. In 2012, the states that authorized the highest weekly payouts were Massachusetts ($939), Rhode Island ($688), Connecticut ($630), New Jersey ($611), and Pennsylvania ($581).

The five states with the lowest weekly maximums were Mississippi ($235), Arizona ($240), Louisiana ($247), Alabama ($265) and Florida ($275).

During normal economic periods, the maximum time frame in most states by which one can receive benefits is 26 weeks.

The Keynesian response to the Great Recession, however, has significantly altered the social safety net landscape. With the passage of the Emergency Unemployment Compensation Program in 2008, insurance has been extended for the long-term unemployed for much longer periods. Dependent upon when unemployment started, the individual state’s unemployment rate, and other factors, the extension period is divided into four tiers and can last as long as 47 additional weeks. Renewed several times previously, the program was set to formally expire on December 31, 2012. However, with unemployment rate still stubbornly high at 7.8%, it was extended for yet another year as an agreement reached during the fiscal cliff negotiations.

Extended Unemployment: What Are the Costs?

As with the majority of the other stimulus programs enacted by Congress to fight the aftereffects of the Great Recession, there have been no formal offsets established to pay for the extended benefits.  The Fiscal Cliff deal establishes higher taxes on individuals making more than $400,000 and couples earning above $450,000, but the projected $620 billion in additional revenues over ten years is considered an augmentation to a still-yet-to-be-negotiated round of spending cuts. The initial costs of extended insurance were massive — roughly $40 billion in 2009, and almost $80 billion in 2010 — before gradually reducing in the next two years. The Congressional Budget Office has estimated 2013’s budgetary expense associated with the program at $30 billion. Overall, through 2012, the total cost of the program since enacted in 2008 is in excess of $200 billion. Remember, this figure does not include unemployment insurance costs not associated with the extended benefits program, which further add to the tally covered by the social safety net.

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