Press Releases

Govt. Report Estimates $23 Billion Saved by Extending UI Benefits

May 25 2010

Washington, D.C.
-- Today, the U.S. Congress Joint Economic Committee (JEC) released a report showing that the federal government could save more than $23 billion by extending unemployment benefits.

The report, entitled Extending Unemployment Insurance Benefits:  The Cost of Inaction for Disabled Workers,” focuses on labor force participation for unemployed disabled workers.  In the absence of extending the unemployment benefits program, these workers would likely drop out of the labor force and turn to Social Security Disability Insurance (SSDI), which would cost the federal government $24.2 billion.  In contrast, the cost of keeping these workers attached to the labor force by extending unemployment benefits and COBRA premium subsides would be only $721.3 million in 2010 (see chart).

“Extending unemployment benefits provides an immediate positive jolt to the U.S. economy because unemployed individuals spend the money quickly – to put food on the table, pay rent or their mortgage, and clothe their children.  Every dollar of unemployment benefits multiplies into $1.60 of economic activity,” said Congresswoman Carolyn Maloney, Chair of the JEC.  “This report highlights the cost of inaction as it relates to disabled workers.  Not only is an extension of unemployment benefits the morally right thing to do, it is fiscally responsible, especially when you look at unemployed disabled workers.”

Charles E. Schumer, Vice Chair of the JEC, said, “If anyone still wasn’t convinced that unemployment benefits are a sound investment that gets a good bang for the buck, this report removes any doubt.  In addition to being the right thing to do for those who are out of work through no fault of their own, extending these benefits also makes good economic sense.  As the evidence shows, it more than pays for itself.  We will be pushing to extend these benefits through the end of the year shortly in the Senate.”

The JEC estimates that a failure to extend unemployment insurance benefits would result in nearly 290,000 disabled unemployed workers exhausting unemployment benefits in 2010.  The majority of these disabled exhaustees are likely to turn to the SSDI program for economic support.  These SSDI recipients are likely to remain permanently on disability rolls, even after economic conditions improve.

This is a costly proposition, especially because SSDI recipients become eligible for Medicare benefits after two years on the disability insurance.  The JEC estimates the lifetime cost of providing disability benefits to individuals pushed out of the labor market by the failure to extend unemployment benefits is over $24.2 billion.

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