Unemployment Benefits Extension Cutoff Did Nothing To Lower Jobless Rate, Data Shows

With the unemployment benefits extension cutoff last December, Republicans predicted that when the long-term unemployed lost their benefits they would be forced to go back to work, lowering the unemployment rate. When the Labor Department announced this month that the jobless rate fell to 6.1 percent — the lowest rate since the recession began in September 2008 — the GOP declared victory.

“The debate on that extension is over, and the conservatives were right,” wrote Republican columnist Charles Krauthammer, summing up the GOP position on the unemployment benefits cutoff.

“Conservatives won the unemployment debate,” declared National Review Online, a leading conservative political news site.

But did they? A look at the actual data proves that the answer is — no.

The numbers say that the unemployment benefits extension cutoff had no effect at all on lowering the jobless rate, either by forcing people back to work — or by causing the long term unemployed to stop looking for work altogether.

People who are not actively seeking jobs are not counted toward the unemployment rate and are sometimes referred to as the “invisible employed.”

“The labor market is improving for everyone, not just the long-term unemployed,” reports the business site MarketWatch. “In fact, it’s improving more for people who’ve been out of work for a shorter time.”

The Republican prediction was based on the belief that unemployed people become lazy when receiving unemployment benefits and ending those benefits acts as a kick in the pants to get them back to work.

But Republicans have shown no evidence of that actually happening, and no one else has, either.

What the data, as kept by the Bureau of Labor Statistics, does show is this: the long-term unemployed, more than 3.3 million of whom have lost benefits in 2014, are finding work at a marginally better rate this year than last year. Every month, 13 percent of those without jobs for more than six months go back to work, compared to 11 percent or 12 percent for each month in 2013.

But doesn’t that prove the Republicans’ point, even a little?

No, because that data ignores the fact that people who receive benefits are finding jobs at a higher rate than those who do not or those who face a cutoff of benefits soon. The re-employment rate among American workers unemployed for five weeks or less is now 37 percent, compared to 32 percent last year — nearly three times the rate for the long-term unemployed.

What those numbers suggest is, as The New Republic wrote, “Job growth could have accelerated for a number of reasons, including a stronger economy.”

In other words, as the economy improves, people find more work — but the long-term unemployed have a much harder time of it, and for those Americans, the economy is improving at a far slower pace.

But what about the “invisible unemployed?” Did the unemployment benefits extension cutoff force them off the job rolls? Again, data shows that the answer is no. About 26 percent of the long-term unemployed dropped off the rolls each month last year.

In June of 2014, that rate was — 26 percent. The unchanged number proves that the unemployment benefits cutoff had no effect whatsoever.

While it is true that the ranks of the long-term jobless are declining as the following graph shows, it has been declining for years, and now declines at about the same rate as before the unemployment benefits extension was cut off.

“The extended-benefits program wasn’t keeping people from working as the Republicans claimed. That means that ending the program had the main effect of slashing the income of millions of people who are suffering the most,” wrote Rex Nutting of MarketWatch. “The improvement in the labor market this year has come in spite of the end of the benefit program, not because of it.”

The Congressional Budget Office estimated that ending the unemployment benefits extension may have actually stopped the U.S. economy from adding an additional 250,000 jobs.