PoliGraph: Ellison unemployment claim accurate
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Late last year, emergency unemployment insurance expired and U.S. House Democrats have been on a crusade to renew it even though their Republican colleagues aren’t interested.
Democrats have been putting on the pressure this week, using social media to make their case. Here’s a tweet from Rep. Keith Ellison:
“How does the end of emergency unemployment insurance affect the economy? 240,000 jobs. #RenewUI”
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That number comes from a partisan source. But there is a link between job growth and unemployment benefits.
The Evidence
Emergency unemployment insurance is meant for people who have lost their job and are actively seeking another one. The benefits are on top of regular unemployment benefits.
Earlier this year, the U.S. Senate passed an extension of the program. But the proposal seems dead on arrival in the House.
Generally speaking, those on the conservative end of the economic spectrum believe that the longer the benefits are around, the smaller the incentive people have to actually find work.
To underscore the importance of the program, Ellison claimed that expiring benefits actually cost the U.S. economy jobs – 240,000 to be precise.
That figure comes from a report authored by the Obama administration’s Council of Economic Advisors and the Department of Labor.
The theory is that people who get these benefits spend that money on consumer goods. If those benefits are taken away, the unemployed will consume less, demand will drop and jobs will be lost as a result.
The liberal Economic Policy Institute did a similar analysis and found that the economy would lose 310,000 jobs this year if the benefits aren’t extended.
Those are partisan sources of information. But two independent studies also suggest economic growth will sputter with the elimination of emergency unemployment.
A JP Morgan analysis predicted up to a .4 percent decline in economic growth this year.
Meanwhile, the Congressional Budget Office found last winter that extending the benefits for another year would increase demand for goods and increase jobs by about 200,000 (but added that many people wouldn’t look for work quite as intensely if they benefits were available.)
The Verdict
Ellison is using a partisan source to underscore his argument to extend emergency unemployment insurance.
But his analysis isn’t unfounded. Other reports show that there is a link between job growth and those benefits.
His claim leans toward accurate.
ADDITIONAL SOURCES
Michael Strain, American Enterprise Institute
The Washington Post, Unemployment benefits for 1.3 million expire Saturday. Here’s why, by Brad Plummer, Dec. 23, 2013
Mike Casca, spokesperson Rep. Keith Ellison