CBO: Unemployment Benefits Prevented Record Poverty Rate In 2009

WASHINGTON -- Extended unemployment insurance put in place to fight the recession prevented the poverty rate from rising to 15.4 percent in 2009, a level unseen since the 1960s, according to the Congressional Budget Office . The government announced in September that that the 2009 poverty rate had risen to 14.3 percent from 13.2 percent the previous year.

The CBO's analysis, produced at the request of Rep. Jim McDermott (D-Wash.), chairman of the House Ways and Means subcommittee on Income and Family Support, shows that unemployment insurance is essentially a middle-class benefit. Households with total income more than twice the poverty threshold accounted for 70 percent of the $120 billion the government spent on unemployment benefits last year. Families with income below the poverty threshold received eight percent of all benefits.

As CBO explains, "The higher-income families received a larger share of benefits for several reasons: because only people with sufficient recent work histories qualify for benefits, benefit levels rise with previous earnings, and receiving benefits tends to push families into higher income groups."

CBO found that almost half of all families with one person unemployed received benefits in 2009, with the aid accounting for 11 percent of the family's total income -- about $6,000.

Congress routinely gives the unemployed extra weeks of benefits during recessions. In 2008 and 2009, Congress gave the jobless up to 73 weeks of federally-funded benefits on top of the 26 weeks provided by states, meaning the unemployed in some states are eligible for 99 weeks of benefits.

If Congress fails to reauthorize the benefits by the end of the month, the federal programs will lapse and people laid of through no fault of their own will be eligible only for the first 26 weeks of benefits. Roughly two million people will be cut of from benefits by the end of the year, according to the Labor Department.