Monday, June 30, 2008

Unemployment Benefits Extended

by Bill McBride on 6/30/2008 12:05:00 PM

An extension of unemployment benefits for 13 weeks was included in the war funding bill signed by President Bush today.

This extension covers workers who used all their unemployment benefits between November 2006 and March 2009. As I noted last week, some of these people will reapply for benefits, probably pushing weekly claims over 400K per week once the benefits become available. (Typically an extension of benefits adds about 50K per week for about four weeks).

Extended benefits are not included in continued claims (there is a separate category), however continued claims will probably also get a small boost as some job seekers wait for better opportunities.

Although unemployed workers receive the direct benefit of this extension, this program (like all safety nets) is really aimed at employed workers worried about their jobs. Far more people are worried about losing their jobs than will actually be laid off in this downturn - and if all these people pull back sharply on their spending, then the layoffs might become a self fulfilling prophesy. This program helps reduce the financial fear for these workers.