Extending Unemployment Insurance in an Economic Storm

Congress just made significant progress on an issue of particular importance to Michigan: extending unemployment insurance benefits. I strongly supported and worked for this extension and the assistance it will provide to Americans who are struggling to find jobs in this tough economy.

Unemployment insurance is intended to provide temporary help to workers who lose their jobs, in the form of up to 26 weeks of safety net compensation. The idea is to provide workers with enough money to cover basic expenses while they are looking for employment and at the same time to stimulate the economy when there is a downturn.

Since January 2001 Michigan has suffered significant job losses, and the state’s unemployment rate has increased from 4.5 percent to 8.5 percent in May of this year. The nation’s unemployment rate jumped to 5.5 percent in May from 5 percent in April – the biggest jump in one month in 22 years. From May 2007 to May of this year, over 171,000 Michigan workers exhausted their unemployment benefits and could not find jobs. Each month, on average, 13,000 more Michigan workers face this same difficult circumstance.

When the economy is suffering and unemployment is high, Congress has in previous down times recognized that 26 weeks is not enough time for many workers to find a new job. In the past 30 years, Congress has acted three times to establish temporary extended unemployment benefits, each time during a recession. Currently, the number of Americans struggling to get by without a job is higher than it was the last time Congress extended unemployment insurance benefits in 2002.

Extending unemployment benefits is also a highly effective form of economic stimulus for the country as a whole. Indeed, studies indicate that extending unemployment insurance during tough times is one of the most effective ways to stimulate the economy, dollar for dollar. Workers who receive these unemployment benefits are likely to spend them quickly, making this one of the fastest ways to infuse money into our economy in the short term.

The unemployed face tremendous economic pressures. Since President Bush took office, the price of health insurance is up 44 percent, the price of college tuition is up 47 percent and the price of gas is up 95 percent. The rate of home foreclosures is up a shocking 130 percent since 2006.

According to a study by a prominent Harvard Law School professor, between 2000 and 2006 the median household income fell by $1,175, adjusted for inflation. Lower income paired with increased costs for basic expenses – including mortgage payments, gas, food, phone bills, household appliances, and health insurance – means those median income families are facing about a $5,700 reduction in purchasing power from just 8 years ago.

Unfortunately, the economic challenges that Michigan and the entire nation are facing are unlikely to end soon. We need a comprehensive manufacturing plan, like the American Manufacturing Initiative that I, along with other Michigan Democrats in Congress and the Governor, have proposed to level the playing field in manufacturing for our workers and businesses, and to ensure that American jobs do not fall victim to unfair trade agreements. I will continue to fight for these important measures, as well as for further economic stimulus and extensions of unemployment benefits to help Michigan weather this economic storm.

Carl Levin is the senior U.S. senator from Michigan.