Ask the Expert: Heather Boushey on unemployment insurance

What is unemployment insurance?

Unemployment insurance is like other kinds of insurance. It's insurance for when you lose your job through no fault of your own. Now in normal times, people can get unemployment insurance for about six months from their state. But in extraordinary times, when unemployment is exceptionally high like it is today, Congress typically acts to extend unemployment benefits to those folks who've been out of work for at least six months. Unemployment insurance benefits typically cover about a third of a worker's wages that they had prior to them losing their job. But even folks that get unemployment insurance benefits don't have the same kind of health care coverage that they may have had from their previous employer.

How does unemployment insurance work?

Well, when a person loses their job, they can apply for unemployment benefits. And if they've lost their job through no fault of their own, and they qualify for the program, and they have sufficient earnings and all that, then they can get these benefits, which cover about a third of their pre-job loss earnings. Now this program isn't just important for that individual worker and their family but it's also important for the economy at large. Last year, unemployment benefits pulled 3.3 million people out of poverty and all of that extra money that was funneling through the economy through giving folks these unemployment insurance benefits have helped to keep spending up and to boost demand for products, especially from small and local businesses all around the country. So you get that unemployment check and you go down to the corner store and buy something, that helps that local business owner and helps keep the economy going. So it's not only important for individual families but it's important for our economy overall.

Why is it important for Congress to extend unemployment insurance right now?

It is incredibly important for Congress to make sure that those folks who've been out of work for at least six months and who don't qualify for regular unemployment insurance benefits are able to get these extended benefits that have been in effect for a couple of years now. It's important for a number of reasons. First and foremost, the unemployment situation continues to be especially challenging here for millions of Americans. There are more than four or five people out there for every job opening available. So it's like a game of musical chairs: There's one job, but there's actually five people circling around trying to get it. There simply aren't enough jobs for everyone. So it's important that Congress maintains those benefits, especially for the long-term unemployed who've been out there pounding the pavement trying to find work but haven't yet been able to find a job because the economy hasn't created that job for them yet. The second reason that it's really important that we maintain these benefits is that right now, these benefits are a very large part of our economy. They're important for small- and medium-sized businesses all around the country. They're important for landlords, where if they have an unemployed tenant, they're not going to be able to get that rent if that person doesn't continue to get those benefits. It's important to keep our economy humming, that we keep those dollars out there flowing. These benefits will expire at the end of November and we're hopeful that Congress will do the right thing and extend them until the unemployment rate comes back down.