Special resource: The facts on emergency unemployment insurance (EUC)

Unemployment insurance set to expire for millions.

Unemployment benefits are a lifeline to American workers and their families providing for basic needs while jobless workers seek employment. The current federal long-term unemployment program expires Dec. 28, 2013.

What is federal long-term unemployment insurance?

Emergency Unemployment Compensation (EUC) is a temporary federal program that gives unemployed workers additional weeks of unemployment insurance when jobs are scarce. Unemployment insurance helps cushion the economic blow of unemployment for families and also stimulates the economy because, when finances are tight for families, unemployment benefits are spent immediately.

Immediate effects

If the current EUC program is not extended, 1.3 million unemployed workers will be cut off starting Dec. 28. Another 3.6 million workers will lose access to unemployment insurance benefits beyond state benefits (20-26 weeks) by the end of 2014 if Congress does not act.1

Key findings

Millions of families continue to struggle with long-term unemployment, which has been much worse in the recent economic downturn than it was in previous recessions. Four million workers (over one-third of the 11 million unemployed) have been unemployed for 27 weeks or longer — a historically high level not seen since World War II — longer than the 26 weeks that most states provide in state-funded unemployment insurance. Unemployment insurance keeps families from falling into poverty due to long-term unemployment. In 2012 alone, unemployment insurance kept 1.7 million unemployed workers and their families from falling into poverty.2 Without these benefits, families with unemployed workers are likely to face dire financial straits.

Nationwide unemployment remains high (at 7 percent, it is still two points higher than it was at the beginning of the Great Recession in December 2007) and labor force participation has continued to decline, despite drops in the unemployment rate. 1 We still need 7.9 million jobs to get back to the unemployment rate we had prior to the Great Recession.3 There are still three unemployed workers for every job opening.4

Unemployment disproportionately affects communities of color. Historically, African-Americans experience unemployment rates that are double that of whites. Latinos and Native Americans have unemployment rates that are roughly 50 percent higher than whites.5,6

The psychological effects of unemployment and the need for EUC

Psychologists have documented the negative effects of unemployment and the importance of federal and state aid for unemployed workers.7

Unemployment affects mental and physical health. Workers who have lost their jobs have worse mental health, lower life satisfaction, less marital or family satisfaction and poorer physical health than those who are stably employed. Research has found that unemployment is associated with depression, anxiety, psychosomatic symptoms and poor self-esteem. Unemployed workers are twice as likely as their employed counterparts to experience psychological problems and unemployment can also contribute.

Unemployment affects family relationships. The stress of unemployment can affect the psychological well-being of spouses and lead to changes in family relationships that result in negative outcomes for children. Research dating back to the Great Depression found that men who experienced substantial financial loss became more irritable, tense and explosive. Children often suffered as these fathers became more punitive and arbitrary in their parenting. Such paternal behavior, in turn, predicted temper tantrums, irritability and negativism in children, especially boys, and moodiness, hypersensitivity, feelings of inadequacy and lowered aspirations in adolescent girls to reduced life expectancy.

Community effects. The impact of unemployment extends beyond individuals and families to communities, as the lack of resources ripples across local businesses, schools and neighborhoods. The effects of unemployment may be especially harsh for workers of color and their families. Even in good economic times, on average, African-Americans and Latinos/as face higher unemployment rates than do European Americans, and do so with fewer family economic resources to fall back on. Unemployed workers also report less neighborhood belonging than their employed counterparts, a finding with implications for neighborhood safety and community well-being.

The Psychological Benefits of Unemployment Insurance. Countries with stronger systems of protection for the unemployed have lower rates of mental health problems among the unemployed than the United States. This is most likely because the impact of job loss and of underemployment is lessened for those who have economic, social and personal resources to cushion the blow. Individuals who face unemployment with more financial resources, as well as those who report lower levels of financial strain, report better mental health and more life satisfaction than those who experience unemployment with fewer economic resources and a greater sense of financial stress.

APA recommendation

The American Psychological Association urges Congress to extend Emergency Unemployment Compensation through 2014.

Note: This fact sheet is based on the work of Deborah Belle, EdD, and Heather E. Bullock, PhD, as part of a Policy Statement for the Society for the Psychological Study of Social Issues.

References

1Stone, C. (2013). Congress Should Renew Emergency Unemployment Compensation Before the End of the Year. Retrieved from Center on Budget and Policy Priorities website:http://www.cbpp.org/cms/index.cfm?fa=view&id=4053

2Sherman, A. (2013). Why Isn't Poverty Falling? Weakening of Unemployment Insurance Is a Pivotal Factor. Retrieved from Center on Budget and Policy Priorities website:http://www.cbpp.org/cms/index.cfm?fa=view&id=4030

3Gould, E. (2013) Despite Today’s Relatively Positive Jobs Report, the Labor Market Remains Weak. Retrieved from Economic Policy Institute website: http://www.epi.org/publication/todays-positive-jobs-report-labor-market/

4Gould, E. (2013). Ratio of Job Seekers to Job Openings Holds Steady at 2.9-to-1, Equal to the Worst Month of Early 2000s Downturn. Retrieved from Economic Policy Institute website: http://www.epi.org/publication/ratio-job-seekers-job-openings-holds-steady/

5U.S. Bureau of Labor Statistics (2011). Unemployment rates by race and ethnicity, 2010. Retrieved from http://www.bls.gov/opub/ted/2011/ted_20111005.htm

6Austin, A. (2013). Native Americans Are Still Waiting for an Economic Recovery. Retrieved from Economic Policy Institute: http://www.epi.org/publication/native-americans-are-still-waiting-for-an-economic-recovery/

7Belle, D. & Bullock, H.E. (2010). SPSSI Policy Statement: The Psychological Consequences of Unemployment. Retrieved from the Society for the Psychological Study of Social Issues website: http://www.spssi.org/index.cfm?fuseaction=page.viewpage&pageid=145