March 12th, 2010
11:44 AM ET

Do unemployment benefits keep Americans from new work?

With the average unemployed worker out of a job for nearly 20 weeks and nearly 40 percent of the unemployed out of a job for more than six months, Congress passed a short-term extension of unemployment benefits and other economic aid last week. The vote came after the $10 billion bill was held up by Kentucky Republican Sen. Jim Bunning, who complained that the Democratic-led Congress should have found some way to pay for the measure rather than add the cost to the national debt.

Coming to Bunning's defense was Sen. Jon Kyl of Arizona, a fellow Republican. Extending workers' unemployment checks "is a disincentive for them to seek new work," Kyl said on the Senate floor March 1. "I am sure most of them would like work and probably have tried to seek it, but you can't argue it is a job enhancer."

And former House Majority Leader Tom DeLay, another Republican, said on CNN's "State of the Union" on Sunday that keeping benefits coming "keeps people from going and finding jobs."

"There's some studies that have been done that shows that people stay on unemployment compensation and they don't look for a job until two or three weeks before they know the benefits are going to run out," said DeLay, who resigned from Congress in 2006 and is awaiting trial on a money-laundering charge in his home state of Texas.  So, are people just kicking back, enjoying a couple of extra weeks of those unemployment checks? The CNN Fact Check desk decided to ask around.

Fact Check: Do unemployment benefits extend joblessness?

- That's the consensus of most research, according to Bruce Meyer, a professor at  the University of Chicago's Harris School of Public Policy. Meyer said that on average, extending unemployment benefits for five weeks means people are likely to spend an extra week on the jobless rolls.

- A 2006 report by the Government Accountability Office, the investigative arm of Congress, found that workers who receive unemployment insurance checks, which average about $300 a week around the country, "have longer periods of unemployment than workers who do not receive benefits." And unemployment benefits may "somewhat discourage recipients from searching for work," the nonpartisan Congressional Budget Office found in 2008.

- But Meyer cautions that there may be "many reasons" for that delay, and those reasons have not been as well researched. "A lot of people are waiting for a job that pays as well as the old one or close to it or is in a similar industry," he said.

- For workers, there is "a real trade-off" between extending their job search and the often sharply reduced standard  of living that unemployed workers face, Meyer said. "Jobs often aren't out there, and people have skills that have built up in a particular type of job and they don't quickly give up the use of those skills and move to something else."

- The U.S. unemployment rate currently stands at 9.7 percent, with roughly 5.5 applicants for every available job, according to the federal Bureau of Labor Statistics. But as the CBO points out, unemployed workers "quickly spend most of those benefits," making unemployment checks among the most effective tools the government has for stimulating the economy.

Bottom Line:
Academic research does support the argument that people take longer to find work when they receive unemployment benefits. But researchers have done little research into why that is, and some workers may have sound economic reasons for sitting out another week.

- CNN's Emily Smith and Emma Lacey-Bordeaux contributed to this report.

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soundoff (3 Responses)
  1. ERH

    RE: Former House Majority Leader Tom DeLay's comment: "There's some studies that have been done that shows that people...don't look for a job until two or three weeks before they know the benefits are going to run out."

    Here's a prime, sad example of how some politicians (hypocrites) stoop so low to purposely cripple our society by twisting facts with fiction in an effort to promote their own hatred.

    First, if I'm not mistaken, you have to submit proof of seeking employment to continue receiving unemployment benefits.

    Second, bang Tom's quote (and his head) against the more plausible one from Bruce Meyer, University of Chicago's Harris School of Public Policy professor: "...on average, extending unemployment benefits for five weeks means people are likely to spend an extra week on the jobless rolls." ...Big difference, and the latter is from a verifiable source – not some suspect, unknown study.

    Sure, there will always be those who will try to take advantage of a government program and the law...LIKE TOM DELAY, WHO RESIGNED FROM CONGRESS AND IS AWAITING TRIAL ON A MONEY LAUNDERING CHARGE!

    However, punishing the vast majority of taxpaying citizens who really do need assistance in THIS economy, and who have enough morals not to resort to illegal tactics, like money-laundering, is not a solution.

    Tom Delay should focus on his trial and commence searching for his moral compass. I think we've had enough of his kind already!

    March 15, 2010 at 1:45 am | Report abuse |
  2. kevin

    the people who think that living on unemployment is great and fun should try living of of 1/3 of their old income and see how fun it is !

    June 29, 2010 at 10:00 am | Report abuse |