Great news: last week, Congress was able to pass a bill extending the provision of Emergency Unemployment Compensation (EUC). A number of government agencies, including one of our major funders the Department of Labor, released statements celebrating this event, as well as providing some context: EUC “provides relief to more than 2.2 million Americans who have struggled to make ends meet  since emergency unemployment benefits expired” at the beginning of this year. This immediate impact is hugely important for all those who are fighting a very sluggish labor market – but who are those people, and why do they still need unemployment compensation?

EUC is a special unemployment measure that was enacted to counter the effects of the recession. The Great Recession, as it has been called, was a demand-shock recession, meaning in part that it was and is characterized by a lack of consumer (and therefore hiring) demand. People and businesses are not spending enough money to allow employers to profit and grow, and therefore job growth is slow or nonexistent. This has been a large factor in the very slow reduction in the unemployment rate since the recession.

A labor market without many jobs means that the unemployed must search for employment a lot longer. This in turn means that many more people will exhaust their 27 weeks of regular Unemployment Insurance (UI) payments, meaning they neither have a job nor any replacement income to do things like pay rent and other bills or buy food. Obviously, this is a hugely destabilizing situation, especially when these long-term unemployed people number in the millions. In fact, during the recession, the percentage of unemployed people who experienced long-term unemployment more than doubled the historical rate:

 

 

As of just last month, that number is still a distressingly-high 35.8 percent – and unemployment rates might remain stagnant for the next six months or more.

The Department of Labor is beginning to address this crisis through grant opportunities like the Ready to Work Partnership, but this effort may only serve a small fraction of the 3.7 million long-term unemployed, many of which cannot even benefit from the extension of EUC. Those 3.7 million people, not to mention the 12.5 million people still searching for work or even so discouraged they’ve stopped searching, are the strongest possible argument for nationwide support of the work that agencies like Able do, through actions like reauthorizing and fully funding the Workforce Investment Act.