Press Release

MEMO: A Better Way to Help the Unemployed

Extend Benefits and Fix the Unemployment Insurance System

By Heather Boushey | February 9, 2010

Download the full memo (pdf)

Getting people back to work is one of the most important challenges facing our economy and our policymakers. As we outlined in “Meeting the Jobs Challenge,” the key focus of our jobs plan should be:

  • Aid to the unemployed, which boasts the biggest bang for the buck in terms of spurring economic demand
  • Aid to state and local governments to help them avoid layoffs and maintain services
  • Tax cuts for most families, which help to boost spending
  • Investments in infrastructure, which are still ramping up and coming on line, as these projects take longer to get up and running
  • Investments in a green economy, which creates jobs and paves the way for long-term economic sustainability
  • Assistance for those who have been hit hardest by the Great Recession

Ensuring that the unemployed receive benefits while they job search helps workers avoid hardships and provides one of the “biggest bangs for the buck” in terms of economic stimulus to pave the way for a more robust economic recovery. In times of high unemployment, benefits flow to the unemployed, immediately boosting demand above where it would have otherwise been in the areas hardest hit because people in these positions, by force of circumstance, spend what they receive.

The unemployment insurance system was established by the 1935 Social Security Act as a joint federal-state program. The states each administer their own unemployment insurance programs, but the federal government must act to extend benefits to the long-term unemployed—workers who have been out of work and searching for a job for at least six weeks—which is currently a record high 38 percent of all unemployed workers. Yet benefits for the long-term unemployed will expire this month unless Congress acts.

And there are two other problems with the unemployment system that Congress should also address as it looks to extend benefits: insolvency of the UI Trust Funds and broken automatic triggers.

Download the full memo (pdf)