By the time Congress got around to passing an extension of emergency jobless benefits earlier this month, Clyde Lance no longer needed them.
On Dec. 17, his 52nd birthday, Lance started a full-time job helping train technicians for the International Society of Automation in Research Triangle Park, N.C., ending a three-year search for a permanent position.
“I didn’t even realize it was my birthday,” said Lance. “I believe God helped me, gave me this job.”
The dwindling ranks of the long-term unemployed, while testament to the improvement in the labor market, also shows the diminishing returns from what economists such as Mark Zandi say is one of the most effective government programs implemented to spur the recovery: extended unemployment-insurance payments. By the time all figures are in, Lance will be among the almost 1.5 million people who stopped getting those checks last year.
“The bang-for-the-buck from the program is among the highest of any fiscal-stimulus program,” said Zandi, chief economist of Moody’s Analytics in West Chester, Pa., who estimated that every dollar spent in benefits generated 1.55 times as much economic activity. “It is important to have it in place as long as unemployment is high and the recovery is fragile.”
The legislation recently passed by Congress preserved benefits for harder-hit states that provide payments to the jobless for as long as 73 weeks, extending the normal program that typically lasts for the first 26 weeks of unemployment. About $30 billion in long-term benefits will be paid this year, down from about $45.5 billion in 2012, according to government estimates.
Had the benefits lapsed, it would have decreased economic growth by almost 0.2 percentage point this year, according to estimates by economists at JPMorgan Chase & Co. in New York.
Of course, some of that shortfall will be made up by the bigger paychecks and the subsequent gains in spending of the newly hired workers who no longer get jobless payments.