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The Economic Case for Unemployment Insurance and the Supplemental Nutrition Assistance Program

The Economic Case for Unemployment Insurance and the Supplemental Nutrition Assistance Program

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Heather Boushey and Jordan Eizenga explain how unemployment insurance benefits and the Supplemental Nutrition Assistance Program are helping our economy as it recovers from the recession.
Heather Boushey and Jordan Eizenga explain how unemployment insurance benefits and the Supplemental Nutrition Assistance Program are helping our economy as it recovers from the recession.

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Published by: Center for American Progress on Nov 23, 2010
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1Center or American Progress |  The Economic Case or Unemployment Insurance and the Supplemental Nutrition Assistance Program
 The Economic Case for UnemploymentInsurance and the SupplementalNutrition Assistance Program
How They Help Our Economy During the Recession
Heather Boushey and Jordan Eizenga November 2010
Businesses can expec a dreary holiday shopping season i Congress does noconinue benes or he long-erm unemployed. Tese benes help amilies o weaher hard imes, and righ now millions o American amilies remain ou o  work or underemployed. Tey help amilies keep a roo over heir head and oodon he able while hey search or work and wai or he economy o improve.Unemploymen insurance, or UI, along wih he Supplemenal Nuriion Assisance Program or SNAP, ormerly known as ood samps, sabilize he econ-omy by increasing he demand or basic goods and services. Sabilizing demandremains criical o saving and creaing jobs and boosing earnings a his poin inhe economic recovery. I Congress allows benes or he long-erm unemployed
Unemployment insurance and SNAP put money in the pockets o amilies acingunemployment who tend to spend many o these dollars in their local communityon housing, ood, and other basics. Retailers cannot keep tabs on how many o their customers receive unemployment insurance, but they do know how manycustomers use SNAP.Two grocery chains report in interviews with the Center or American Progress thatSNAP benefts now account or about a fth (18 percent to 23 percent) o their totalsales and support between 300 and 2,300 jobs depending on the grocery chain.
Retailers report that beneits matter to sales
 
2Center or American Progress |  The Economic Case or Unemployment Insurance and the Supplemental Nutrition Assistance Program
o expire a he end o November, his could poenially reduce he gains in reailsales in December by 14 percen compared o December 2009.During he Grea Recession, unemploymen insurance and SNAP have kepamilies ou o povery and as a resul boosed sales and seadied he economy asamilies are able o keep up wih heir morgages and ren and aord necessiieseven as hey ace high unemploymen. Te UI sysem pulled 3.3 million people—including 1 million children—ou o povery in 2009 alone.
1
Tis is more peoplehan he enire populaion o he Chicago meropolian area.
2
Food samps alonelifed 2.4 million children ou o “deep povery,”
3
which is greaer han he numbero children living in all o Los Angeles Couny.
4
 
 The current debate over unemployment benefits
Congress is debaing wheher o coninue o und UI or he long-erm unem-ployed. I hey do no, 2 million jobless workers will lose heir long-erm UI benes a he end o November.O his group, 1.2 million will exhaus heir 26 weeks o regular unemploymen insurance ben-es wihou nding work and be ou on heirown. Ohers are currenly receiving UI hroughhe Emergency Unemploymen Compensaionprogram, which provides an addiional 34 o 53 weeks o unemploymen benes above regular benes. Tey will see hose benes expireover he course o he monh.
5
 Te oher 800,000 workers will experience animmediae loss o heir Exended Benes. TeExended Benes program provides beween13 and 20 addiional weeks o unemploymen benes o he long-erm unemployed; bu in39 saes, unding comes rom he legislaion seo expire on November 30.
6
Because o hisorically high shares o workersou o work and searching or a job or morehan six monhs he value o he benes o
Figure 1
Still a great need or long-term unemployment benefts
Total unemployment beneits paid by type and month,December 2007 to October 2010
Source: Bureau of Labor Statistics.
Billions of U.S. dollars
$16$14$12$10$8$6$4$2$0
   D  e  c  -  0   7   F  e   b  -  0   8  A  p  r  -  0   8  J  u  n  -  0   8  A  u  g   -  0   8  O  c  t  -  0   8   D  e  c  -  0   8   F  e   b  -  0   9  A  p  r  -  0   9  J  u  n  -  0   9  A  u  g   -  0   9   F  e   b  -  1  0  A  p  r  -  1  0  J  u  n  -  1  0  A  u  g   -  1  0  O  c  t  -  0   9   D  e  c  -  0   9
Benefits for those unemployed longer than 26 weeksRegular benefits for those unemployed less than 26 weeks
 
3Center or American Progress |  The Economic Case or Unemployment Insurance and the Supplemental Nutrition Assistance Program
he long-erm unemployed is now greaer han he oal benes paid ou ohose who have been ou o work or six monhs or less (see Figure 1). Tismeans ha more so han beore he long-erm unemployed’s benes comprisea criical componen o an eecive scal simulus, as well as helping hose whohave been hi hardes by he Grea Recession.
Discontinuing the program would hurt retailers and theeconomy at large
Disconinuing he UI program or he long-erm unemployed will have real conse-quences or our economy. I will likely be el mos quickly among reailers duringhe upcoming holiday shopping season. As we move hrough he holiday season he immediae cu-o in benes or helong-erm unemployed could have signican negaive implicaions or our naionsreailers. Te workers losing benes have an average weekly bene o a litle over$290 per week, which ranslaes ino a oal loss o abou $2.5 billion dollars in benes over December.
7
Tis is equal o abou one in seven dollars o he oal gainin reail sales seen beween December 2008 and December 2009.
8
 I Congress does no ac—or creaes he impression ha hey will no ac—his willalso aec he purchasing decisions o he workers whose unemploymen insurance benes have no ye been cu o. Tese workers and heir amilies will likely pare back heir holiday spending in anicipaion o losing benes in early 2011.
How unemployment insurance and food stamps help the economy
Unemploymen insurance and ood samps are one o our economy’s rs lines o deense o address recessions. Tese programs are imporan or amilies and heeconomy a large. Tey creae and save jobs and grow he economy.
Job creation
•
Unemploymen benes or he long-erm unemployed have kep an average o 1.6 million American workers in jobs every quarer during he recession.
9
 
•
Te U.S. Deparmen o Agriculure esimaes ha $1 billion in ood sampscreaes beween 8,900 and 17,900 ull-ime jobs.
10

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