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Do Recent Improvements in the Labor Market Justify Ending the Federal Unemployment Benefits Program?

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Publication Date: January 2004

Publisher(s): Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Isaac Shapiro

Funder(s): Center on Budget and Policy Priorities (Washington, D.C.)

Funder(s): Center on Budget and Policy Priorities (Washington, D.C.)

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Labor (Employment and labor supply)

Keywords: Economic projections; Unemployment rate; Job displacement; Economic inequality

Type: Report


For the time being, Congress has let the federal Temporary Extended Unemployment Compensation (TEUC) program expire. Any individuals who have exhausted their regular unemployment benefits since the week that began December 21 have been ineligible for TEUC aid. Although substantial support for resuming the program remains in Congress and cuts across party lines at least to some degree, opponents of its continuation — including key Republican House leaders — have argued that recent improvements in the economy and the labor market show the program is no longer needed.

This analysis examines that argument, in part by comparing the health of the labor market today to its health when the temporary federal unemployment benefits program of the early 1990s was ended (House Majority Leader Tom Delay, among others, has said that this comparison justifies ending the TEUC program now), as well as by assessing today’s labor market relative to the labor market when the TEUC program began in March 2002. As the box below indicates, the labor market is far from healthy enough to end the TEUC program.