If the past is any indication, Congress would reap a good return on its investment by extending jobless benefits through November, according to an analysis by the nonpartisan Colorado Fiscal Policy Institute.
Extensions to federal payments for the recently unemployed have pumped $1.5 billion into the state since July 2008, the institute said in a report scheduled for release by the end of this week. That yielded an estimated $1.64 billion in economic activity, according to the study.
“The biggest thing is that it’s going to people who are sure to spend it quickly,” said Alec Harris, a policy analyst at the institute. “The government and policymakers really have a hard time finding something as efficient stimulating the economy as unemployment benefits.”
The institute used economic forecasting software to calculate how the unemployed spent the federal money. Government agencies and universities also use the software program, called Implan, to evaluate economic policies.
Unemployment benefits work better than tax cuts at stimulating the economy because recipients are likely to spend them on necessities such as rent and food instead of saving the money, economists say.
According to the analysis, the added spending from unemployment benefits created almost 12,000 jobs.
Harris said the benefits also work because they are tiered, providing less money the longer it takes for a job seeker to find work.
“Our unemployment-insurance program is designed to incent(ivize) people to work,” he said.
Drew FitzGerald: 303-954-1381 or dfitzgerald@denverpost.com
