Friday, June 26, 2009

Historical Unemployment Insurance

I detailed this morning the increasing importance of unemployment insurance. But how does the current level compare to history?

The chart below details the dollar level of unemployment insurance as a percent of private wages.

We are now at a level not seen since the early 1980's and the speed at which this level is increasing doesn't seem to be slowing.

Source: BEA


  1. What makes that spike even scarier is that extended benefits are expiring. When you consider the number of structural flaws hiding behind the veil of data analysis, even good data analysis not distortionate, things could get a little dicey.
    Case in point being the Existing / New Home sales gap which Norris mentions but CalculatedRisk has been analyzing for months. That's due to REO, foreclosures, etc. If 50% of existing sales are poor quality what does that really say about Housing ?

  2. Agreed.

    What this chart does show is how important unemployment insurance has been and I'd argue it will be important to extend them.

    While the amount received is capped, many of those first joining the ranks of unemployment did not reach that high water mark. Thus, expect this figure to rise regardless of the exhaustion rate (those that lose their benefits as they have been collecting too long), as higher income individuals continue to show up in the #'s.

  3. Several good points. You make a great case for extending benefits as being as stimulative as anything.