The following is from testimony given April 14, 2010, before the Senate Finance Committee by Mark Zandi Chief Economist of Moody’s Analytics. It's frightening how appropro it is three months later to the unemployment situation and debate regarding Congress' decision not to extend unemployment insurance.
"The 8.4 million decline in jobs represents over 6% of the pre-recession job base, and the nearly double-digit unemployment rate means some 15 million Americans are looking for jobs. There are nearly five unemployed workers for each available position; normally the ratio is at most one unemployed worker per open position. (Note: It's now estimated that there are more than six unemployed Americans for each job.)
For anyone losing a job, moreover, it is extraordinarily difficult to find another. The average length of unemployment is closing in on eight months, and nearly half of those unemployed have been out of work more than the 26 weeks normally covered by unemployment insurance. (Note: the percentage of Americans who have been out of work for six months or more has now grown to 55%.) Even in the early 1980s—the last time unemployment hit double digits—only 1/4 of the unemployed were out of work that long. During the worst recession of the 1950s, closer to a 1/10 of workers were in this difficult position.
The unemployment statistics are bad, but they still understate the stress in the job market. Including those working part-time because they cannot find full-time work, and those who want to work but are not counted as unemployed because they have not looked for jobs in the past month, the so-called underemployment rate jumps to almost 17%.
This represents an astounding 26 million Americans. On top of that are those whose hours have been cut back; the average number of hours worked per week remains just above record lows.
... The recession’s severe job losses erased a decade of U.S. employment growth. Not until 2013 are payrolls expected to regain their previous peak.
... It will take even longer for unemployment to decline to its full-employment rate. The estimated full-employment unemployment rate has already risen from below 5% prior to the Great Recession to nearly 5.5% now and could go even higher unless unemployment begins to decline soon. Assuming job growth performs as expected, unemployment will not fall back to a rate consistent with full employment until 2014.
It is ... important that policymakers provide emergency benefits to those who will lose their jobs this year. No form of the fiscal stimulus has proved more effective during the past two years than emergency UI benefits, providing a bang for the buck of 1.61—that is, for every $1 in UI benefits, GDP one year later is increased by an estimated $1.61.
This economic boost is large because financially stressed unemployed workers spend benefits quickly, as opposed to saving them ... if emergency UI benefits are not extended ... the recovery would struggle to evolve into an expansion as anticipated.
... If large numbers of unemployed workers begin running out of UI benefits this spring and summer, consumer sentiment could sink further. Attitudes would sour not only among the unemployed but also among their relatives, friends and neighbors, as they worry more about their own situations."
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