Unemployment insurance is one of the most efficient anti-recession programs, because benefits are almost entirely spent on immediate basic needs. Because the money received from UI is spent so spent so quickly rather than being saved, it actually boosts the economy. Each dollar of UI benefits produces well over a dollar of economic activity for the nation as a whole. And that extra economic activity ultimately creates thousands of jobs through increased demand. By one estimate, continuing the $600 weekly enhanced unemployment benefits for an extra year would boost employment by over 5 million jobs and increase the average quarterly GDP by 3.7 percent.
Just as importantly, UI directly helps prevent foreclosures, evictions, and people falling into poverty, with the suffering avoided numbering in the millions during the great recession. It’s estimated that the expansion of unemployment benefits included in the CARES Act, in conjunction with the one-time Economic Impact Payments, have prevented a huge rise in poverty rates, despite not all those who are eligible actually receiving them.