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Research & Analysis

Report

The Fiscal Cliff and Unemployment Insurance Benefits

Implications for the States

Unemployment Facts and Figures 

A Year or More

Like the six-month long-term unemployment rate, the percentage of the unemployed who have been jobless for at least a year also remains well above pre-recession levels. For example, in the third quarter of 2012, over 28 percent of the unemployed had been jobless for a year or more.iv That translates to 3.6 million workers.

Even as entirely federally financed unemployment benefits phase out completely, demand is likely to remain high. The unemployment rate in November 2012 stood at 7.7 percent, with a total of 12.0 million jobless U.S. workers.[i] Measured against the 3.7 million job openings in that period, [ii] this translates to more than three unemployed workers for every job opening. The Congressional Budget Office has projected that under current law—which includes all scheduled tax increases and spending cuts under the fiscal cliff—overall unemployment would rise above 9 percent by the end of calendar year 2013 and would not return to the “natural” rate of around 5.5 percent until calendar year 2018.[iii] 

Moreover, in November 2012, 40.1 percent of the total unemployed had been out of work for six months or more[iv]—the limit for state funded Unemployment Compensation benefits in most states. That translates to 4.8 million workers. While the long-term unemployment rate has fallen from its March 2011 peak of 45.5 percent, it remains well above pre-recession levels (see Figure 1). With the scheduled expiration of the EUC program in particular, some longer-term unemployed individuals would lose access to this source of income support.

  

UI_revised_chart  

References

The Unemployment Insurance System

[1] U.S. Department of Labor, State Unemployment Insurance Benefits, updated January 13, 2010, http://workforcesecurity.doleta.gov/unemploy/uifactsheet.asp.

[2] Julie M. Whittaker and Katelin P. Isaacs, Unemployment Insurance: Legislative Issues in the 112th Congress (Congressional Research Service, September 12, 2012), http://www.fas.org/sgp/crs/misc/R41662.pdf.

[3] Ibid.

[4] Ibid.

[5] As of December 9, 2012, New York was the last state to trigger off of EB. U.S. Department of Labor, Employment and Training Administration, Unemployment Insurance Weekly Claims Report, accessed October 26, 2012, http://workforcesecurity.doleta.gov/unemploy/claims_arch.asp. Because some states allow claimants to backdate claims, some unemployed individuals in states outside of New York also received EB in November.

[6] Julie M. Whittaker and Katelin P. Isaacs, Unemployment Insurance: Legislative Issues in the 112th Congress (Congressional Research Service, September 12, 2012), http://www.fas.org/sgp/crs/misc/R41662.pdf.  States are allowed to determine whether EUC or EB programs are paid first. See Julie M. Whittaker, Emergency Unemployment Compensation (Congressional Research Service, July 11, 2008), http://assets.opencrs.com/rpts/RS22915_20080711.pdf.

[7] Julie M. Whittaker, Emergency Unemployment Compensation (Congressional Research Service, July 11, 2008), http://assets.opencrs.com/rpts/RS22915_20080711.pdf.

[8] Julie M. Whittaker and Katelin P. Isaacs, Unemployment Insurance: Programs and Benefits, (Congressional Research Service, September 19, 2012), http://www.fas.org/sgp/crs/misc/RL33362.pdf.

[9] EUC authorization expires the week ending on or before January 2, 2013. Thus, the last day of EUC availability is December 29, 2012 (December 30, 2012 for New York). Julie M. Whittaker and Katelin P. Isaacs, Unemployment Insurance: Programs and Benefits, (Congressional Research Service, September 19, 2012), http://www.fas.org/sgp/crs/misc/RL33362.pdf.

[10] Julie M. Whittaker and Katelin P. Isaacs, Unemployment Insurance: Legislative Issues in the 112th Congress (Congressional Research Service, September 12, 2012), http://www.fas.org/sgp/crs/misc/R41662.pdf.

Unemployment Insurance Benefits

[1] Pew analysis of data from the U.S. Bureau of Labor Statistics, The Employment Situation – November 2012, Table A-1. Employment status of the civilian population by sex and age. December 7, 2012, http://www.bls.gov/news.release/archives/empsit_12072012.pdf; and U.S. Department of Labor Employment and Training Administration, “Persons Claiming UI Benefits in Federal Programs (Expanded),” November 17, 2012, http://ows.doleta.gov/unemploy/docs/persons.xls.

[2] Katelin P. Isaacs, Expiring Unemployment Insurance Provisions (Congressional Research Service, February 28, 2012). The number of EUC recipients declined from 3 million in January 2012 to 2.1 million in October 2012, while the number of EB recipients declined from 475,000 to 37,000 over the same period. Pew analysis of U.S. Department of Labor Employment and Training Administration, “Persons Claiming UI Benefits in Federal Programs (Expanded),” January 28 and October 27, 2012, http://ows.doleta.gov/unemploy/docs/persons.xls.

[3] Individuals receiving 100 percent federally-funded UI benefits would lose any remaining weeks of such benefits after December 2012. See Julie M. Whittaker and Katelin P. Isaacs, Unemployment Insurance: Legislative Issues in the 112th Congress, Congressional Research Service, September 12, 2012,http://www.fas.org/sgp/crs/misc/R41662.pdf; and U.S. Department of Labor, Middle Class Tax Relief and Job Creation Act of 2012 Extension and Modification of EUC08 Program and Temporary Extension of EB Provisions Fact Sheet, 2012, http://www.ows.doleta.gov/unemploy/pdf/Factsheet_EUC&EB.pdf. 

[4] Congressional Budget Office, An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022, August 2012,  https://www.cbo.gov/sites/default/files/cbofiles/attachments/08-22-2012-Update_to_Outlook.pdf; These figures include spending for federal administrative costs, federal benefits, and state benefits.

[5] Pew analysis of data from the U.S. Department of Labor Employment and Training Administration, UI Outlook FY 2013 Budget Midsession Review, July 2012, http://www.oui.doleta.gov/unemploy/pdf/MSR.pdf.

[6] Karen Spar, Budget “Sequestration” and Selected Program Exemptions and Special Rules (Congressional Research Service, October 2, 2012), http://www.fas.org/sgp/crs/misc/R42050.pdf.

[7] U.S. Department of Labor Employment and Training Administration, UI Outlook FY 2013 Budget Midsession Review, July 2012, http://www.oui.doleta.gov/unemploy/pdf/MSR.pdf.

[8] Karen Spar, Budget “Sequestration” and Selected Program Exemptions and Special Rules (Congressional Research Service, October 2, 2012), http://www.fas.org/sgp/crs/misc/R42050.pdf.

Unemployment Facts and Figures

[1] U.S. Bureau of Labor Statistics, The Employment Situation – November 2012, December 7, 2012, http://www.bls.gov/news.release/archives/empsit_12072012.pdf.

[2] U.S. Bureau of Labor Statistics, Job Openings and Labor Turnover Survey, December 2012. This figure is for the last day of October, 2012, and subject to revision, http://www.bls.gov/jlt/.

[3] The Congressional Budget Office also estimates that under current law the unemployment rate will rise to 9.1 percent in the fourth quarter of 2013, averaging 8.8 percent for the calendar year. Congressional Budget Office, An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022, August 2012, https://www.cbo.gov/sites/default/files/cbofiles/attachments/08-22-2012-Update_to_Outlook.pdf.

[4]  U.S. Bureau of Labor Statistics, The Employment Situation – November 2012, Table A-12. Unemployed Persons by duration of unemployment. December 7, 2012, http://www.bls.gov/news.release/archives/empsit_12072012.pdf.

[5] Pew analysis of U.S. Bureau of Labor Statistics Current Population Survey, July through September 2012.  For past work on long-term (a year or more) unemployment, see Pew Fiscal Analysis Initiative, Addendum: A Year or More: The High Cost of Long-Term Unemployment, May 2012, http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Addendum_Long-Term_Unemployment_May2012.pdf.

State Impacts Would Vary

[1] U.S. Bureau of Labor Statistics Local Area Unemployment Statistics, Regional and State Employment and Unemployment – October 2012, Table 3. Civilian labor force and unemployment by state and selected area, seasonally adjusted. November 20, 2012, http://www.bls.gov/news.release/archives/laus_11202012.pdf.  

[2] Pew analysis of U.S. Bureau of Labor Statistics, Geographic Profile of Employment and Unemployment, 2011, Table 26. States: unemployed persons by sex, race, Hispanic or Latino ethnicity, and duration of unemployment, 2011 annual averages. September 2012, http://www.bls.gov/opub/gp/pdf/gp11full.pdf. 

[3] Pew analysis of data from the U.S. Census Bureau data and U.S. Department of Labor data, Employment and Training Administration, EUC Aggregate and EB Monthly Program Activity, accessed November 20, 2012, http://www.ows.doleta.gov/unemploy/euc.asp. The calculations here assume that the number of EUC and EB beneficiaries in a given state in a month is equal to the average of the weekly numbers of EUC and EB weeks paid in that state in the month, as reported by the state to the Employment and Training Administration.

[4] Pew analysis of data from the U.S. Census Bureau data and U.S. Department of Labor data, Employment and Training Administration, EUC Aggregate and EB Monthly Program Activity, accessed November 20, 2012, http://www.ows.doleta.gov/unemploy/euc.asp. The calculations here assume that the number of EUC and EB beneficiaries in a given state in a month is equal to the average of the weekly numbers of EUC and EB weeks paid in that state in the month, as reported by the state to the Employment and Training Administration.

 

Date:
December 14, 2012
Contacts:
Jeremy Ratner | 202.540.6507
Project:
Fiscal Federalism Initiative
Issues:
Unemployment
State:
National

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PCS.PRODUCTION.1.20130430.1315 (PEWSUWVMWAPP01)