Two Years of UI Benefits Contributing to High Unemployment

James Sherk /

Unemployment has skyrocketed in this recession. Worse, it has remained abnormally high. Joblessness never rose above 8 percent in either the 2001 or 1991 recessions, but now almost one in ten Americans do not have jobs, and in some parts of the U.S. the rate is over 1 out of 5. Why?

The weak economy and the job-killing policies coming from Washington are the biggest culprits. The collapse of the housing bubble and the credit crunch hammered businesses, and new taxes and regulations are hitting employers when they are down. However, policies designed to help the jobless are – ironically – also at fault.

Congress extended the maximum length of time the unemployed can collect unemployment insurance (UI) beyond the usual six months. Congress often does this by recessions, but never before by so much. Now workers in high unemployment states can collect unemployment insurance for 99 weeks – almost two years of benefits. Congress did this to help those out of work. But economic studies consistently show that when workers collect longer UI benefits they also stay unemployed longer. (more…)