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Job Creation Is the Best Solution for Unemployed Americans

January 7, 2014

The Senate is debating S.1845, legislation to extend the Emergency Unemployment Compensation (EUC) Program until April 1, 2014. The extension would be retroactive to the end of 2013. The bill also extends for three months the emergency changes made to the permanent Extended Benefits (EB) program to provide 100 percent federal funding, compared to the 50-50 cost sharing between states and the federal government under permanent law. 

The authorization for the “temporary” federal program created in 2008 expired at the end of 2013, after 11 extensions. Americans will still qualify for up to 26 weeks of state unemployment compensation (UC) checks, and another 13 to 20 weeks more depending on their state’s unemployment rate. According to new research, letting this “temporary” program end will remove barriers to job creation.

Real Help for Unemployed Americans

Long-term unemployed Americans want jobs. S.1845 contains no provisions to help grow the economy and increase employment. Congress should focus its attention on efforts to spur job creation. Below is a list compiled by the Whip’s office of some of the proposals Senate Republicans have put forward to help hardworking Americans:

  • S.2091 (112th) (Enzi) - United States Job Creation and International Tax Reform Act
  • S.15 (Paul) - Regulations From the Executive in Need of Scrutiny Act 
  • S.151 (Johanns) - Restoring America's Competitiveness in Enterprise Act 
  • S.191 (Roberts) - Regulatory Responsibility for our Economy Act 
  • S.232 (Hatch) - Medical Device Access and Innovation Protection Act 
  • S.582 (Hoeven) - to approve the Keystone XL pipeline
  • S.603 (Barrasso) - Jobs and Premium Protection Act 
  • S.1188 (Collins) - Forty Hours is Full-Time Act
  • S.1324 (Barrasso) - National Energy Tax Repeal Act
  • S.1488 (Coats) - delay Obamacare individual and employer mandates
  • S.1490 (Flake) - one-year delay of Obamacare
  • S.1616 (Lee) - Family Fairness and Opportunity Tax Reform Act
  • S.1658 (Toomey) - Start-Up Jobs and Innovation Act
  • S.1852 (Paul/McConnell) - Economic Freedom Zones Act

More Spending, but No Offsets or Reforms

S.1845 contains no offsets to its $6.4 billion cost. And unlike when the program was extended in 2012, this bill contains no reforms to the unemployment program. Currently, as a precondition of participating in EUC, states are prohibited from actively reducing their weekly unemployment benefits. In July 2013, North Carolina passed legislation that reduced its weekly benefit, making the state ineligible for EUC. Its unemployment rate fell from 8.9 to 7.4 percent.

Other states have reduced their UC benefits duration to decrease payments and address their UC financing shortfalls, resulting in a reduction in the number of weeks of federal EUC benefits available in those states. South Carolina reduced the maximum duration of state benefits from 26 to 20 weeks in June 2011. Its state unemployment rate fell from 10.6 to 7.1 percent. Missouri lowered its maximum duration from 26 to 20 weeks effective April 2011. Its unemployment rate dropped from 8.6 to 6.1 percent. The experiences of these states suggest that the expiration of EUC will not lead to job losses.

Costs Pile Up

According to the Congressional Budget Office, S.1845 will increase the deficit by $6.6 billion in 2014 and $6.4 billion over 10 years. This is in addition to the $265 billion that the federal government has spent on the EUC and EB programs since 2008. 

Unemployment Spending Since 2008 (in billions)

Unemployment Spending Since 2008 (in billions)

*Federal Additional Compensation of $25/week; expired on June 2, 2010
Source: Labor Department

Eleven Extensions of EUC Program

Since its enactment in June 2008, Congress has revised the EUC program while extending it 11 times. In addition to as many as 26 weeks of unemployment benefits available under the regular UC program, further benefits have been available in certain states. Past extensions have created multiple tiers of states based upon the total unemployment rate (TUR) -- computed by dividing total unemployed by the civilian labor force. 

Eleven Extensions of EUC Program

Since its enactment in June 2008, Congress has revised the EUC program while extending it 11 times. In addition to as many as 26 weeks of unemployment benefits available under the regular UC program, further benefits have been available in certain states. Past extensions have created multiple tiers of states based upon the total unemployment rate (TUR) -- computed by dividing total unemployed by the civilian labor force. 

Additional Benefits Provided by the EUC Program

CRS: Additional Benefits Provided by the EUC Program

Source: CRS