Title: The Cost of Unemployment to the Economy
Headings: The Cost of Unemployment to the Economy
The Cost of Unemployment to the Economy
It’s not just the price of paying out benefits
Key Takeaways
Costs to the Individual
Costs to Society
Costs to the Country
The Bottom Line

Content: Studies have shown that times of elevated unemployment often correlate both with less volunteerism and higher crime. 9 ﻿ 10 ﻿ Elevated crime makes sense, because absent a wage-paying job, people may turn to crime to meet their economic needs. The volunteerism decline does not have an obvious explanation, but could perhaps be tied to the negative psychological impacts of being jobless or perhaps even resentment toward those who do not have a job. The Coronavirus Aid, Relief, and Economic Security (CARES) Act has expanded unemployment benefits to self-employed and part-time workers. Costs to the Country
The economic costs of unemployment are probably more obvious when viewed through the lens of the national checkbook. Unemployment leads to higher payments from state and federal governments for unemployment benefits, food assistance, and Medicaid. In July 2020 payments from state and federal governments for unemployment benefits totaled $18.26 billion. 11 ﻿ At the same time, state and federal governments are no longer collecting the same levels of income tax as before—forcing these governments to borrow money, which defers the costs and impacts of unemployment into the future, or cut back on other spending. Unemployment is also a dangerous state for the U.S. economy. Almost 70% of what the U.S. economy produces goes to personal consumption and unemployed workers.