WH report: Failure to extend federal unemployment benefits will cost 240,000 jobs, lower GDP in 2014

Failure to extend federal unemployment benefits for 2014 will result in the loss of about 240,000 jobs and lower next year’s GDP growth by 0.2% to 0.4%, according to a report released by the White House Council of Economic Advisors and the Department of Labor.

An estimated 4.9 million Americans will lose their federal unemployment benefits in 2014 unless Congress votes to extend the Emergency Unemployment Compensation [EUC] program. The EUC program provides federal unemployment benefits for jobless workers after their state unemployment benefits run out. (Workers now receive 26 weeks – or 6 months – of state unemployment benefits.) In order to qualify, the individual must be actively seeking employment.

If the program is not renewed, this would force many long-term unemployed workers to cut back even more, which the report pointed out would cause “significant adverse effects on aggregate demand and thus on employment.”

“This drop in consumption means a loss of demand for businesses,” according to the report. “[Unemployment compensation] mitigates the impact of a recession on a broader economy because unemployed workers – whose income has been severely reduced due to the job loss – tend to spend their benefits rather than save them.”

Without the extension, an estimated 240,000 jobs will be lost due to reduced consumer demand. The job losses will affect California (46,411), New York (19,826), New Jersey (19,660), Pennsylvania (15,200), Illinois (13,345), Texas (11,766), and Florida (10,109).

The non-partisan Congressional Budget Office has estimated that the U.S. GDP would be 0.2% to 0.4% lower unless the EUC program is extended.

The federal emergency unemployment compensation has been a lifeline for workers like Lisa Floyd, who recently testified before the House Democratic Steering and Policy Committee.

Floyd, who spent 14 years as the Director of Volunteer Services at a non-profit hospice in Huntington, West Virginia, before she was laid off, said it took her 8 months to finally find a job (at a lower wage). Floyd applied for jobs outside of her field, for lower pay, and even sought out entry-level call center jobs. Her stack of job applications measured 2 feet tall.

“I applied for everything and anything,” Floyd told lawmakers. “I have spent the majority of my waking hours looking for work.

Despite her aggressive job search, Floyd was unable to find a job by the time her regular state unemployment benefits ended in early November after 26 weeks. But she was able to stay afloat because of the federal emergency unemployment compensation.

“For me, these programs have done what they are supposed to do: They kept me in my home. I could still buy groceries and pay my bills. My anxiety was kept to a manageable level. And I was able to keep sending out applications and going on interviews,” said Floyd. “Without unemployment insurance and the federal emergency benefits, I would have not been able to sustain myself and my job search.”

Just days before giving her testimony to urge lawmakers on Capitol Hill to extend the federal unemployment benefits, Floyd received news that she was hired for a new job.

“I am so relieved and grateful that I won’t have to face that now but I know millions of others are that the same risk as I was just two days ago…I am here on their behalf pleading with Congress to renew the federal emergency unemployment compensation program for 2014, and please give the other 1.3 million Americans a fighting chance to become re-employed,” Floyd said. “I am an emergency unemployment compensation success story. Won’t you please allow this to be America’s story?”

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8 Comments on “WH report: Failure to extend federal unemployment benefits will cost 240,000 jobs, lower GDP in 2014

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