The primary extension program, accounting for 53 weeks of the total extensions of 73 weeks, recently was authorized to remain effective through June 2, 2010. Because most states, especially larger ones, have exceeded these extension trigger points, most regular UI recipients were eligible for a complete or near-complete set of extensions as of late 2009. Eligibility for the complete series of extensions is determined by state-level triggers that are based on the level and change in a state’s overall unemployment rate. In the recent downturn, the maximum period has been increased five times, reaching 99 weeks in qualifying states, which substantially exceeds the previous maximum of 52 weeks for selected groups of workers, such as airline employees after 9/11. Normally, UI benefits are available for 26 weeks, but the maximum benefit period typically is extended during economic downturns. One factor that may have contributed to the recent spike in unemployment duration is the extension of UI benefits to a maximum of 99 weeks. This is all the more noteworthy because the unemployment rate peaked at 10.8% in late 1982, a higher level than in late 2009 when it reached 10.1%. Adjusting for this redesign increases the 1983 peak value to 3.0%). The share of individuals unemployed for at least 6 months reached 4.3% in March, well above the previous high of 2.6% registered in 1983 (the 1994 redesign of the household survey raised the values of this series. When displayed as a share of the total labor force, as in Figure 1, the recent spike is even more striking. That share has risen well above its previous high posted in 1983, reaching 44.1% in March. The number unemployed for at least six months is often displayed as a share of total unemployment. Figure 1 shows the proportion of the total labor force that has been unemployed for at least six months. However, the increase in unemployment duration during the current protracted labor market downturn has been unprecedented. The resulting sharp increase in the number of job seekers relative to the number of available jobs substantially slows the rate of job finding. Job losers flood the unemployment pool at the same time that employers curtail hiring. Unemployment duration always rises in recessions. Gray bars denote recessions (latest trough tentatively dated 6/09). Note: Underlying data series from the U.S. We calculate that, in the absence of extended benefits, the unemployment rate would have been about 0.4 percentage point lower at the end of 2009, or about 9.6% rather than 10.0%. However, analysis of data on unemployed individuals decomposed by their reason for unemployment, which affects their eligibility for UI, suggests that extended UI benefits have had a relatively modest effect. Such a dynamic could raise the unemployment rate. The question arises whether this extended availability of UI benefits has contributed to a lengthening of unemployment spells because jobless workers are staying in the labor force longer in order to continue collecting benefits. As of late 2009, individuals in most states were eligible for up to 99 weeks, or nearly two years, of UI benefits, well above the normal limit of six months. At the same time, however, following congressional legislation that temporarily extended eligibility for unemployment insurance (UI) benefits, the maximum period for UI claims also reached new historical highs. The spike in unemployment duration is among the most compelling indicators of the severe economic dislocation caused by the recent recession. Unemployment duration, or the amount of time that an individual remains unemployed, reached new historical highs in 2009. Analysis of unemployment data suggests that extended unemployment insurance benefits have not been important factors in the increase in the duration of unemployment or in the elevated unemployment rate. During the current labor market downturn, unemployment duration has reached levels well above its previous highs.
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