Congress is out this week for the July 4 recess, and unemployment benefits will have run out for about 2.5 million Americans by the time they return on Monday since the Senate filibustered legislation that would have extended unemployment insurance. Economics is science, not mysticism. Some policies will positively affect economic growth, and unemployment insurance is one of the most effective of those.
The U.S. Census Bureau let go of 225,000 temporary Census workers in June, leading to an overall loss of 125,000 payrolls nationally. But the private sector added only about 83,000 jobs, continuing a trend of sluggish growth. It will take 5.5 years to recover the jobs lost since December 2007 at the rate jobs have been added in the past three months. Employment isn’t even increasing fast enough to keep pace with population growth.
On top of that, 6.8 million Americans have been out of work and looking for a job for six months or longer. These individuals will spend less as their unemployment benefits expire, dampening demand for goods and services and constraining businesses who want to expand and hire.
The Congressional Budget Office estimates that the American Recovery and Reinvestment Act, the stimulus legislation passed in 2009, saved between 1.2 million and 2.8 million jobs. We would have lost 8.7 million to 10.3 million jobs rather than losing 7.5 million had the Senate filibustered that law.
Extending unemployment benefits, along with providing fiscal relief to states with budgets in crisis, is a cheap and effective way to stimulate demand and create jobs. Long-term structural reform in state and federal government won’t be possible without swift action to put out economy back on track.