ECONOMIC AND BUDGET ISSUE BRIEF

Losing a Job During a Recession

Each year, even when the economy is growing, millions 

of people lose a job for reasons other than poor performance or misconduct. The ability of employers to 

quickly adjust the size of their workforces in response to 

changes in demand is generally considered a source of 

strength for the U.S. economy over the long term, 

because it prompts a shift of labor resources toward areas 

of higher productivity. Some people, however, bear substantial costs from employers’ flexibility—particularly 

during recessions, when many people lose jobs and new 

opportunities are relatively scarce.

This issue brief reviews the research on the short- and 

long-term effects of involuntary job loss for reasons other 

than poor performance or misconduct on people’s future 

employment and earnings.1 In light of the recession that 

began in December 2007 and the Congressional Budget 

Office’s (CBO’s) projection that, under current law, the 

unemployment rate will remain elevated for a number of 

years, the brief focuses on the effects of involuntary job 

loss during periods of weak economic activity.2 The brief 

also summarizes some of the government programs that 

help people who have lost their job.

Many people who lose a job involuntarily find a new job, 

some quite quickly (within a month or so) and others 

after more time. Loss of a job often means a loss of health 

insurance for the worker and perhaps for his or her family, though the recently enacted health care legislation will 

enhance the opportunities for people to purchase health 

insurance. Some people who lose a job involuntarily do 

not find a new job. Some of those people may decide not 

to look for a new job, while others may look for a job but 

be unsuccessful in their search. Even among workers who 

find a new job, many end up with lower earnings, not 

only in the short term but also over a period of many 

years. 

Several points warrant attention at the outset. First, outcomes for people who lose their job “for cause”—that is, 

because of their poor performance on the job—may 

differ significantly from those examined in this brief. 

Second, the best information on the consequences of job 

loss during recessions necessarily comes from past recessions, because data regarding job loss during the most 

recent recession are generally not yet available. But no 

two recessions are alike: The most recent recession is associated with a specific set of challenging circumstances, so 

the labor market downturn has been especially severe, 

and output is expected to grow fairly slowly during this 

recovery.3

 Third, many of the results presented in this 

brief represent what might be expected to happen, on 

average, to people who lose a job during a recession. The 

array of actual outcomes is quite broad, however. Some 

people who lose a job during a recession will recover 

quickly, while others will suffer worse effects than the 

average person who lost a job. Fourth, job loss has many 

potential consequences that are not discussed here. For 

example, people who lose a job tend to have more health 

problems later in life, their family life can suffer, and 

entire communities may struggle, especially if job loss is 

concentrated in particular geographic areas.4

CBO A series of issue summaries from

the Congressional Budget Office

APRIL 22, 2010

1. Hereafter, in this brief, the term “involuntary job loss” excludes 

job loss for poor performance or misconduct.

2. Recessions examined here include those from November 1973 to 

March 1975; January 1980 to July 1980; July 1981 to November 

1982; July 1990 to March 1991; March 2001 to November 2001; 

and December 2007 to June 2009. All of those dates but the last 

one were identified by the National Bureau of Economic Research 

(NBER); the NBER has not officially determined the end of the 

last recession, but CBO estimates that it occurred last June.

3. Congressional Budget Office, The Budget and Economic Outlook: 

Fiscal Years 2010 to 2020 (January 2010), Chapter 2. 

4. See Sarah A. Burgard, Jennie E. Brand, and James S. House, 

“Toward a Better Estimation of the Effect of Job Loss on Health,” 

Journal of Health and Social Behavior, vol. 48, no. 4 (December 

2007), pp. 369–384.
2 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

Figure 1.

Selected Categories of Unemployed 

People, as a Percentage of the 

Labor Force

(Percent)

Source: Congressional Budget Office based on data from the 

Bureau of Labor Statistics (BLS). 

Notes: The percentage of people who have lost a job comes from 

the data series titled "Lost Job, BLS Definition." That series 

includes unemployed people who involuntarily lost their last 

job, including people fired for poor performance, and those 

who completed a temporary job. It only includes people 

available and looking for work and excludes people on 

temporary layoff.

Long-term unemployed people are those who have been 

unemployed for at least 27 consecutive weeks.

The shaded vertical bars indicate the duration of recessions. 

The National Bureau of Economic Research establishes the 

dates on which recessions begin and end but has not yet 

done so for the end of the most recent recession, which is 

shown as having ended in the second quarter of 2009.

Employment After Involuntary Job Loss

Involuntary job loss generally results from the operating 

decisions of an employer. It can happen with varying 

amounts of advance notice, ranging from a sudden and 

unexpected shutdown to layoffs or plant closings 

announced several months in advance. In either case, 

many people attempt to find a new job that is similar to 

their last one, while others may change careers or pursue 

interests outside of the paid workforce. Finding a new job 

is usually more difficult when the economy is weak.

Finding a New Job

Some people who lose their job in an unfavorable labor 

market find work relatively quickly, but others take a long 

time. Among people who were displaced from their job 

in 2003—when the unemployment rate peaked at 6 percent—and were reemployed by January 2006, CBO 

found that 10 percent were reemployed within a week.5

Another 25 percent found a job within a month. In contrast, 25 percent were jobless (although not necessarily 

searching for work) for six months or more. In 2009, the 

fraction of the labor force consisting of unemployed people who lost their last job (including those who were fired 

for poor performance) and the fraction that had been 

unemployed for 27 weeks or more (the so-called longterm unemployed) were well above their previous peaks, 

which occurred after the back-to-back recessions of the 

early 1980s (see Figure 1). In March 2010, 44 percent of 

unemployed people (a subset of the entire labor force) 

had been jobless for 27 weeks or more.6

A shift away from temporary layoffs and toward permanent layoffs has contributed to the increased duration of 

unemployment in recent decades. Temporary layoffs, 

from which a person can reasonably expect to be called 

back to work, were more common in the recessions of the 

1970s and 1980s—when union membership and manufacturing jobs were more prevalent—than in the recessions of the 1990s and 2000s.7

 If a worker’s position is 

completely eliminated in a permanent layoff, that person 

must search for and find a new job, probably with a new 

firm, before heading back to work. That process can take 

1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

6

5

4

3

2

1

0

People 

Who Have 

Lost a Job 

Long-Term

Unemployed

People

5. Congressional Budget Office, Long-Term Unemployment (October 

2007), Box 2, p. 11. Those estimates are based on survey 

responses from January 2006 regarding jobs lost in 2003. Some 

survey participants will probably not recall (and therefore will not 

report) all jobs lost two years before the survey. And respondents 

are probably more likely to forget job losses associated with little 

or no hardship. That is, respondents may be less likely to report 

job losses associated with relatively short periods of unemployment. See Congressional Budget Office, Displaced Workers: Trends 

in the 1980s and Implications for the Future (February 1993), 

Figure A-1, p. 44.

6. Bureau of Labor Statistics, “The Employment Situation—March 

2010,” news release, USDL-10-0394 (April 2, 2010).

7. In 1975, 1980, and 1982, about 20 percent of unemployed 

people were on temporary layoff. In 2009, 11 percent were. See 

Bureau of Labor Statistics, “Table A-11: Unemployed Persons by 

Reason for Unemployment,” available at www.bls.gov/webapps/

legacy/cpsatab11.htm.
ECONOMIC AND BUDGET ISSUE BRIEF

LOSING A JOB DURING A RECESSION 3

much longer than simply returning to work with a former 

employer once demand rebounds.

Finding a job may require substantial effort and flexibility, especially when openings are scarce. Some people do 

not know how to search for a new job effectively. Some 

find that they need to acquire new skills more suited to 

the job opportunities available to them or relocate to an 

area with better prospects. One analysis of data from 

1978 to 1990 found that in some states with high rates of 

unemployment, the unemployment rate decreased only 

when many of the unemployed people moved to a different state.8 Even before the most recent recession, a 

declining share of the population was moving; now, when 

a significant share of homeowners owe more on their 

mortgage than their house is worth, many people may 

not be able to sell their house for enough money to 

enable them to relocate.9 Still other people may need to 

consider alternative employment arrangements, including 

part-time work or self-employment. People who lost a 

full-time job during the recessions of the early 1980s, 

early 1990s, and early 2000s were more likely to be 

subsequently employed in a part-time job than those who 

lost their job during periods of stronger economic 

growth.10 Finally, many people may need to adjust their 

expectations regarding the pay they are willing to accept 

in a new job. 

The need to shift from one industry to another to gain a 

new job is partly responsible for workers’ prolonged 

unemployment. Recessions often accelerate the demise or 

shrinkage of less efficient and less profitable firms, especially those in declining industries. For example, the steel 

industry in Pennsylvania suffered substantial cutbacks 

during the recessions of the early 1980s, as the industry 

adjusted to a long-term reduction in demand for steel in 

the United States coupled with a reduction in demand 

associated with the recession.11 Many workers who had 

acquired experience and skills specific to the steel industry were hard-pressed to find jobs in other industries. 

Similarly, if the renewable energy sector expanded over 

time, some workers in traditional energy sectors (such as 

coal) would have to retool their skills and perhaps change 

industries to pursue a job.12 For those who live in an area 

in which traditional sources of energy have historically 

been a primary source of jobs, that transition to a new job 

in a new industry would probably be especially difficult. 

The need to shift from one occupation to another is also 

partly responsible for prolonged unemployment. 

Demand for workers performing tasks that can be routinized, such as recordkeeping or repetitive assembly, 

declined between 1970 and 1998 relative to the demand 

for workers performing other tasks that are more difficult 

to routinize, such as legal writing or janitorial services.13

As a result, some workers in the former set of jobs needed 

to pursue ways to obtain jobs of the latter type.

Leaving the Labor Force

Most people who lose a job for reasons other than poor 

performance or misconduct eventually find a new job, 

but others simply leave the labor force altogether (that is, 

stop looking for work). Between 1981 and 2003, during 

recessions as well as periods of economic growth, about 

10 percent of people who lost their job left the labor 

force.14 Some of those people left only after an extended 

job search. 

Among those who lost a job involuntarily between 1981 

and 2003, three groups of workers—women, older people, and less-educated people—were more likely to leave 

the labor force than were others who lost a job.15 Particularly for second earners in a household (frequently, married women), spending more time caring for family 

members or participating in volunteer activities may be 

preferable alternatives to returning to the paid workforce. 

People with health problems that make it difficult to 

work may decide to apply for disability benefits instead. 8. Olivier Jean Blanchard and Lawrence F. Katz, “Regional 

Evolutions,” Brookings Papers on Economic Activity, no. 1 (1992), 

pp. 1–75.

9. William H. Frey, The Great American Migration Slowdown: 

Regional and Metropolitan Dimensions (Brookings Institution, 

December 2009); and Congressional Budget Office, The Budget 

and Economic Outlook: Fiscal Years 2010 to 2020. 

10. Henry S. Farber, “What Do We Know About Job Loss in the 

United States? Evidence from the Displaced Workers Survey, 

1984–2004,” Economic Perspectives (Spring 2005), pp. 13–28.

11. See General Accounting Office, The Health of the U.S. Steel 

Industry, GAO/NSIAD-89-193 (July 1989), pp. 28–35. 

12. Congressional Budget Office, The Economic Effects of Legislation to 

Reduce Greenhouse-Gas Emissions (September 2009). 

13. See David H. Autor, Richard J. Murnane, and Frank Levy, “The 

Skill Content of Recent Technological Change: An Empirical 

Exploration,” Quarterly Journal of Economics, vol. 118, no. 4 

(November 2003), pp. 1279–1333.

14. See Farber, “What Do We Know About Job Loss in the United 

States?” 

15. Ibid. 
4 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

And some older people who lose a job may find retirement to be an affordable alternative to looking for work. 

Earnings After Involuntary Job Loss

In both the short and the long term, people who lose a 

job for reasons other than poor performance or misconduct and then find a new job see their earnings decline, 

on average. Short-term declines in earnings—those in the 

first few years after a job loss—tend to be larger for people who lose a job during or shortly after a recession. 

People who lost and then found full-time jobs between 

1981 and 1983, 1989 and 1993, and 2001 and 2003 

(three periods of subpar economic activity) all experienced relatively large initial declines in earnings as 

compared with people who lost jobs during periods of 

stronger economic activity between 1984 and 2000. 

Those who lost jobs from 2001 through 2003 experienced the largest average decline in earnings—

14 percent. The average decline in earnings associated 

with a job loss in periods of stronger economic activity 

between 1984 and 2000 varied. For people who lost and 

then found full-time jobs in the late 1990s, for instance, 

declines in earnings were relatively small, between zero 

and 2 percent. During the other nonrecession years, 

earnings declines were typically 5 percent to 8 percent.16

For people who have acquired a substantial amount of 

firm-specific knowledge, the loss of a job can be associated with a relatively large decline in earnings in the short 

term. For people who lost and then found a full-time job 

between 1981 and 2003, initial declines in earnings were 

larger in percentage terms for those with longer tenure on 

the job than for those with shorter tenure.17 Among men 

who lost their jobs in a mass layoff during the 1982 recession, older workers (those ages 50 to 55) experienced 

earnings declines in the year following their job loss that 

were more than 40 percent higher than the earnings 

declines of men in their 20s and 30s.18

Initial declines in earnings associated with losing a job 

during a recession may persist for many years. The new 

job might have both lower earnings and less potential for 

earnings growth in the future than the lost job.19 Among 

the men who lost their job in a mass layoff during the 

1982 recession, for example, earnings 15 to 20 years later 

were about 20 percent lower than those of similar men 

who did not lose their job. For those who lost their job, 

earnings declined by about one-third, on average, in the 

shorter term (a year after job loss).20 Those estimates 

include earnings losses for men who did not find a new 

job (that is, those with no earnings), as well as those who 

worked full or part time. If the analysis is restricted to 

men who found a new job after being laid off, the initial 

and the long-term declines in earnings are smaller but 

still significant. The long-term losses in earnings for 

women—at slightly less than 20 percent—were similar to 

the declines for men. However, women’s earnings 

declined by about 40 percent one year after losing their 

job in a mass layoff, a larger decline (in percentage terms) 

than that for men. 

Evidence suggests that the long-term decline in earnings 

associated with a layoff during periods of relatively strong 

economic growth tended to be smaller than for layoffs 

during recessions. For men who lost jobs in layoffs at the 

peak of the late-1980s recovery, the 10-year loss in earnings was about three-fifths as large as for men who lost 

jobs during the early 1980s recession.21

Health Insurance Coverage After 

Involuntary Job Loss

Loss of a job often means a loss of health insurance for 

the worker and perhaps for his or her family. In 2007, 

before the most recent recession began, over 160 million 

people under the age of 65—or more than three out of 

every five nonelderly Americans—had health insurance 

that was employment based.22

16. Ibid. 

17. Ibid. 

18. People who lose a job in a mass layoff are a subset of those who 

involuntarily lose a job more generally. See Till M. von Wachter, 

Jae Song, and Joyce Manchester, Long-Term Earnings Losses Due to 

Mass Layoffs During the 1982 Recession: An Analysis Using U.S. 

Administrative Data from 1974 to 2004 (working paper, Columbia 

University, April 2009), available at www.columbia.edu/

~vw2112/papers/mass_layoffs_1982.pdf. 

19. Farber, “What Do We Know About Job Loss in the United 

States?”

20. Von Wachter, Song, and Manchester, Long-Term Earnings Losses 

Due to Mass Layoffs During the 1982 Recession.

21. Ibid. 

22. John Holahan and Allison Cook, Changes in Health Insurance 

Coverage, 2007–2008: Early Impact of the Recession (Menlo Park, 

Calif.: Kaiser Family Foundation Issue Paper, October 2009).
ECONOMIC AND BUDGET ISSUE BRIEF

LOSING A JOB DURING A RECESSION 5

During the 1990s, in areas with relatively high 

unemployment rates, working-age men, whether 

employed or unemployed, were less likely to have health 

insurance, but there was no difference in health insurance 

coverage for working-age women and children.23 For 

men under the age of 65, an increase of 1 percentage 

point in a state’s unemployment rate was associated with 

a decrease of 0.7 percentage points in the probability of 

having health insurance coverage. No statistically 

significant relationship between unemployment rates 

and insurance coverage existed for women and children 

during that period, in part because Medicaid and, in the 

late 1990s, the Children’s Health Insurance Program 

provided coverage to families—mostly women and their 

children—if their income was below certain limits. 

No exact counts of the number of people who lost health 

insurance during the recession that began in December 

2007 are available yet. The decline is expected to be substantial, however, because the unemployment rate topped 

10 percent in late 2009, and many unemployed people 

lack health insurance. In the first half of 2009, 33 percent 

of unemployed adults had been uninsured for more 

than one year, and an additional 28 percent had been 

uninsured for at least part of the previous year. As a 

point of reference, 15 percent of all adults (including 

unemployed adults) had been uninsured for more 

than one year, and an additional 10 percent had been 

uninsured for at least part of the previous year.24

Programs That Assist People Who 

Lose Jobs

A number of government programs are available to help 

people who have lost their job, such as unemployment 

insurance (UI) and the Supplemental Nutrition Assistance Program. Disability Insurance (DI) and Supplemental Security Income (SSI) are also available to some 

people who are unable to work because of a severe health 

problem. Training and education programs as well as provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)—which makes possible the 

continuation of health coverage at group rates for individuals—are also helpful to some people. 

Some of the programs are available only to people who 

have lost their job involuntarily, and others are designed 

to help people, with or without jobs, who are experiencing misfortune (especially financial distress) for various 

reasons. The income support or other assistance provided 

by those programs eases the difficulties often associated 

with the loss of a job. For some people, however, the 

availability of support will delay their return to work.25 A 

brief description of some of the existing programs appears 

below, but it is beyond the scope of this brief to elaborate 

on each program’s effectiveness or discuss all relevant 

programs. 

Unemployment Insurance

The UI program targets unemployed people who lose a 

job for reasons other than poor performance or misconduct. The program is intended to ease labor-market transitions by providing temporary income support to people 

with sufficient work history who lose their job and are 

looking for work. Of the 16 million people unemployed 

in March 2010, 11 million (or about 70 percent) were 

receiving UI benefits.26 Because the program temporarily 

replaces a portion of people’s lost earnings, the affected 

job seekers have less incentive to accept a job offer than 

they would have otherwise. 

The federal government pays states to administer the program, funds benefits for certain groups of unemployed 

workers, and provides general guidelines and some 

restrictions on how states may operate their UI programs.27 Each state sets its own eligibility requirements, 

determines the duration and amount of regular benefits, 

and specifies the payroll taxes that fund those programs. 

In every state, eligibility and benefits are based in part on 

workers’ past earnings, usually from the first four of the 

23. John Cawley and Kosali I. Simon, “Health Insurance Coverage 

and the Macroeconomy,” Journal of Health Economics, vol. 24 

(2005), pp. 299–315. 

24. Michael E. Martinez and Robin A. Cohen, “Health Insurance 

Coverage: Early Release of Estimates from the National Health 

Interview Survey, January–June 2009” (National Center for 

Health Statistics, December 2009), available at www.cdc.gov/

nchs/data/nhis/earlyrelease/insur200912.pdf.

25. For instance, the availability and size of UI benefits may somewhat discourage recipients from accepting less desirable jobs. The 

effect is probably less pronounced when work is especially hard to 

find. See Congressional Budget Office, Options for Responding to 

Short-Term Economic Weakness (January 2008), p. 17.

26. Bureau of Labor Statistics, “The Employment Situation—March 

2010,” Table A-14; and Department of Labor, “Unemployment 

Insurance Weekly Claims Report” (April 8, 2010).

27. For instance, the federal government funds benefits for 

unemployed federal workers.
6 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

Figure 2.

Unemployment Insurance Recipients 

Who Have Exhausted Their 

Regular Benefits

(Percent)

Source: Congressional Budget Office based on data from the 

Department of Labor, Employment and Training 

Administration.

Notes: The exhaustion rate is the percentage of unemployment 

insurance recipients who collect all of the regular benefits 

to which they are entitled. 

The shaded vertical bars indicate the duration of recessions. 

The National Bureau of Economic Research establishes the 

dates on which recessions begin and end but has not yet 

done so for the end of the most recent recession, which is 

shown as having ended in the second quarter of 2009.

previous five completed quarters. The law requires states 

to screen new UI claimants, identify the ones most likely 

to exhaust their benefits, and refer them to reemployment 

services.28

The duration of regular UI benefits is generally limited to 

no more than 26 weeks over a one-year period. In 2009, 

more than half of the people receiving UI benefits 

exhausted their regular benefits without finding a job, 

more than at any time since 1972 (see Figure 2). Many of 

those workers continued to receive support through the 

existing extended benefits program or through the emergency unemployment compensation program.

The permanent program for extended benefits provides 

an additional 13 to 20 weeks of benefits beyond the 

standard 26 weeks, depending on each state’s laws and 

unemployment rate. That program is usually jointly 

funded by the federal and state governments, but it is 

funded completely by the federal government from 

February 2009 through June 2, 2010 (initially as part of 

the American Recovery and Reinvestment Act of 2009, 

or ARRA, and most recently as part of the Continuing 

Extension Act of 2010). In the week ending March 20, 

2010, approximately 200,000 people received benefits 

through the extended benefits program.29

Temporary additional benefits, known as emergency 

unemployment compensation, are also available in this 

recession. The current program was established in June 

2008 and was most recently extended in April 2010.30

The program now provides as many as 53 additional 

weeks of benefits to people who exhaust their other benefits before June 2, 2010. Benefits under the emergency 

unemployment compensation program are provided in 

four separate tiers; the first two tiers, of 20 and 14 weeks, 

are available to people in all states who exhaust their 

other benefits before June 2, 2010. Benefits for additional 

tiers of 13 and 6 weeks also may be paid out to people 

who exhaust the first two tiers, depending on when they 

exhaust the benefits available to them and whether the 

unemployment rate in their state reaches certain specified 

levels.31 In the week ending March 20, 2010, 5.6 million 

people received emergency unemployment compensation.32 Under current law, the program will be closed 

to new beneficiaries beginning June 2, 2010, and 

28. See section 4 of the Unemployment Compensation Amendments 

of 1993 (Public Law 103-152, 107 Stat. 1517); and Stephen A. 

Wandner, “Employment Programs for Recipients of Unemployment Insurance,” Monthly Labor Review (October 2008).

1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

55

50

45

40

35

30

25

0

29. Department of Labor, “Unemployment Insurance Weekly Claims 

Report.” 

30. The Supplemental Appropriations Act of 2008 (P.L. 110-252), 

signed on June 30, 2008, established the program. The most 

recent extension was part of the Continuing Extension Act of 

2010 (P.L. 111-157). States differ in the order in which benefits 

are taken. In some states, a person must exhaust both his or her 

regular and extended benefits before receiving emergency benefits. 

In other states, a person moves from receiving regular benefits to 

receiving emergency benefits to receiving extended benefits.

31. The maximum number of weeks a person can possibly receive 

unemployment benefits is 99. That would include 26 weeks of 

regular benefits, 20 weeks of extended benefits, and all tiers 

(20 + 14 + 13 + 6 weeks) of emergency unemployment 

compensation.

32. Department of Labor, “Unemployment Insurance Weekly Claims 

Report.”
ECONOMIC AND BUDGET ISSUE BRIEF

LOSING A JOB DURING A RECESSION 7

individuals will not be able to qualify for a subsequent 

tier of benefits after that date. 

ARRA (and subsequent extensions) boosted the amount 

of unemployment benefits that people receive by $25 per 

week. People who receive any form of unemployment 

benefits before June 2, 2010, will receive the additional 

federal compensation. After that date, those beneficiaries 

will continue to receive the $25 payment until they 

exhaust whatever form of unemployment compensation 

they are receiving (regular benefits, extended benefits, or 

emergency unemployment compensation). 

The outlays and revenues of the federal and state programs are recorded in the federal budget. In fiscal year 

2009, outlays for UI benefits totaled $119 billion; about 

$75 billion of that amount was paid to unemployed 

workers for benefits under the regular program. Those 

amounts represent substantial increases over spending for 

UI in 2007, which totaled $33 billion. Under current 

law, outlays for UI benefits will total about $156 billion 

in fiscal year 2010, CBO estimates, of which about 

$81 billion will be paid to unemployed workers for benefits under the regular program, $7 billion will be used to 

provide extended benefits, $55 billion will be used to 

provide emergency unemployment compensation, and 

$13 billion will cover the added $25 per week in federal 

compensation. About 15 million workers will begin 

receiving regular UI benefits in 2010, in CBO’s estimation, and they will receive $300 per week for 18 weeks, 

on average.33

Lawmakers are considering legislation that would extend 

selected UI provisions—emergency unemployment compensation, the full federal funding of extended benefits, 

and the additional federal compensation—through 

December 31, 2010.

Supplemental Nutrition Assistance Program

The Supplemental Nutrition Assistance Program, formerly known as the Food Stamp program, provides food 

assistance to low-income people, including those who 

have lost a job. Outlays for the program totaled $56 billion in fiscal year 2009. In December 2009, 39 million 

people living in 18 million households received more 

than $5 billion in benefits through the program. (During 

that month, nearly one in eight Americans received benefits.) The average monthly benefit was about $135 per 

person, or $293 per household. Although the number of 

participants grew by about 23 percent between December 

2008 and December 2009, total costs increased by 

roughly 44 percent. Costs have increased disproportionately in part because of a boost in benefits included in 

ARRA. (As a result of that legislation, for example, a 

household of four receives $80 more per month.) 

Programs for People with Disabilities

People who have lost a job and who have severe disabilities and a sufficient work history may be eligible for benefits from the Disability Insurance program, administered 

by the Social Security Administration.34 Benefits are 

based on people’s lifetime earnings. People with relatively 

low earnings (often less-educated people or people who 

worked intermittently or part-time) receive a larger percentage of their earnings than other DI recipients. After a 

two-year waiting period, all people who receive DI benefits—regardless of their age—also qualify for Medicare.

When job opportunities become more scarce, either in 

the entire economy or in particular localities, people with 

disabilities who lose their job may be more likely to turn 

to the DI program for support.35 A study of the 1988–

1992 period found that an increase of 1 percentage point 

in the unemployment rate led to a 4 percent increase in 

DI applications and, after one year, a 3 percent increase 

in new benefit awards.36 Coinciding with the recession 

that began in December 2007, DI applications and 

awards both increased. In the fourth quarter of 2009, 

roughly 680,000 people applied to the DI program, 

31 percent more than in the fourth quarter of 2007. Over 

the same period, the number of people awarded DI benefits rose by 20 percent. Almost 8 million people received 

DI disabled-worker benefits in December 2009; average 

monthly benefits amounted to nearly $1,100.37 In fiscal 

33. That benefit amount excludes the additional $25 per week.

34. Under the rules of the Social Security Administration (SSA), a 

person is considered disabled if that individual cannot do the 

work he or she did before or if he or she cannot adjust to other 

work because of a medical condition (the SSA makes that determination) and if the disability has lasted or is expected to last for at 

least a year or result in death. 

35. David H. Autor and Mark G. Duggan, “The Growth in the Social 

Security Disability Rolls: A Fiscal Crisis Unfolding,” Journal of 

Economic Perspectives, vol. 20, no. 3 (Summer 2006), pp. 71–96. 

36. David C. Stapleton and others, “Introduction,” in Kalman Rupp 

and David C. Stapleton, eds., Growth in Disability Benefits: Explanations and Policy Implications (Kalamazoo, Mich.: W.E. Upjohn 

Institute for Employment Research, 1998), Exhibit 1.2, p. 15. 

37. Data come from the Social Security Administration and are available at www.ssa.gov/OACT/STATS/dibStat.html and 

www.ssa.gov/OACT/STATS/dib-g3.html. 
8 CONGRESSIONAL BUDGET OFFICE

ECONOMIC AND BUDGET ISSUE BRIEF

year 2009, disabled workers on Medicare accounted for 

17 percent of the Medicare population and received 16 

percent of total benefit payments. The average cost of 

Medicare services for DI beneficiaries in 2009 was about 

$9,400 per person.38

Another program administered by the Social Security 

Administration, Supplemental Security Income, provides 

financial support to aged, blind, or disabled adults and 

children who have limited income and assets. Unlike DI, 

eligibility for SSI does not depend on previous work history. At the end of 2009, more than 5 million adults with 

disabilities received SSI benefits; about 700,000 new SSI 

awards went to disabled adults in 2009, an increase of 

23 percent over new awards in 2007. The average regular 

monthly benefit for disabled adults in the SSI program in 

December 2009 was just over $475. The number of 

children who receive SSI benefits also swelled during the 

most recent recession, rising by about 10 percent (from 

1.1 million in 2007 to 1.2 million in 2009).

Smaller Programs 

Provisions of COBRA are intended to assist people who 

face the loss of their health insurance when they lose their 

job. Under COBRA, a person may continue health insurance coverage through the insurance plan at their former 

job for up to 18 months.39 Involuntary job loss for reasons other than gross misconduct qualifies an individual 

to participate, and family members may also have the 

right to continued coverage under the group health insurance plan. 

The out-of-pocket cost of health insurance purchased 

under COBRA tends to be three to five times higher than 

the cost to workers of employment-based health insurance, because people must pay the share of the premium 

previously paid by their employers.40 Eligibility for 

COBRA has been expanded, and premiums have been 

temporarily reduced, initially as a part of ARRA and most 

recently as part of the Continuing Extension Act of 2010, 

by 65 percent for 15 of the 18 months of eligibility for 

certain qualified individuals. Those lower premiums 

apply to workers who were involuntarily terminated from 

their job between September 2008 and May 2010. The 

federal government is covering the cost of reducing the 

premiums by providing tax credits to the employers of 

those workers who choose COBRA coverage. At the time 

of ARRA’s enactment, the staff of the Joint Committee 

on Taxation estimated that the program would reduce 

federal revenues in fiscal years 2009 and 2010 by 

$14.3 billion and $9.2 billion, respectively.41

The federal government also funds other programs 

intended to help people make the transition from one job 

to another. Those programs include job-search assistance, 

job referrals, training,42 and educational assistance 

provided through Pell grants and subsidized student 

loans. Educational assistance is available to, but not specifically targeted at, job seekers. A small fraction of workers who lose their job when international competition 

leads U.S. firms to close is eligible for benefits under the 

Trade Adjustment Assistance program. In fiscal year 

2009, outlays for that program totaled $440 million. 

Other types of assistance have been proposed for people 

making the transition to new jobs. Examples include proposals to help one-stop career centers place more people 

in jobs or to supplement the earnings of people who take 

new jobs with lower pay.43

41. In general, the employer is reimbursed for the portion of the 

premium not paid by the employee through a credit against its 

payroll taxes.

42. See title III of the Workforce Investment Act of 1998 

(P.L. 105-220, 112 Stat. 1080). 

43. See Louis S. Jacobson, Strengthening One-Stop Career Centers: 

Helping More Unemployed Workers Find Jobs and Build Skills,

Hamilton Project Discussion Paper 2009-01 (Washington, D.C.: 

Brookings Institution, April 2009); and Gary Burtless, “Income 

Supports for Workers and Their Families: Earnings Supplements 

and Health Insurance,” in Harry J. Holzer and Demetra Smith 

Nightingale, eds., Reshaping the American Workforce in a Changing 

Economy (Washington, D.C.: Urban Institute Press, 2007). 

38. Benefits exclude drug benefits under Part D of Medicare. See 

Department of Health and Human Services, “2009 CMS Statistics,” Tables I.1 and III.5, available at www.cms.hhs.gov/ResearchGenInfo/02_CMSStatistics.asp.

39. See section 10001 of the Consolidated Omnibus Budget 

Reconciliation Act of 1985 (P.L. 99-272, 100 Stat. 222).

40. See Kaiser Family Foundation and Health Research and 

Educational Trust, Employer Health Benefits: 2009 Annual Survey

(Menlo Park, Calif., and Chicago, Ill., 2009).

This brief was prepared by Molly Dahl and Joyce 

Manchester of CBO’s Health and Human Resources 

Division. It and other CBO publications are available at 

the agency’s Web site (www.cbo.gov).

Douglas W. Elmendorf

Director