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Should Unemployment Benefits Be Extended in Bad Times?

In every major recession since the 1950s, Congress has enacted a temporary program providing additional weeks of federally funded unemployment insurance benefits to cope with adverse conditions on the labor market. But rarely has the debate about whether to increase the generosity of the Unemployment Insurance (UI) system been as heated and as politically divisive as since the beginning of the Great Recession and the introduction of the Emergency Unemployment Compensation (EUC) by the Unemployment Compensation Extension Act of 2008. The key arguments of the opponents to UI benefits extensions are that these extensions deepen both the unemployment problem and the government deficit. Despite a lot of opposition, the EUC program has been extended by Congress to January 3, 2012, by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. But now that Congress is talking about even further extending the program, state politicians are beginning to act on their own to bypass Congress and reduce the generosity of UI benefits in their state.

Camille Landais
Publication Date
May, 2011