Friday, September 03, 2010

Three Newspapers In One

1) New York Times editorial, June 15, 2010:
Since June 1, when federal unemployment benefits began to expire, an estimated 325,000 jobless workers have been cut off. That number will swell to 1.25 million by the end of the month unless Congress extends the benefits. The Senate, so far, has failed to act. . .

The right thing to do is obvious. The House and Senate should immediately extend unemployment benefits.
2) New York Times columnist Paul Krugman, March 5, 2010:
So the Bunning blockade is over. For days, Senator Jim Bunning of Kentucky exploited Senate rules to block a one-month extension of unemployment benefits. In the end, he gave in, although not soon enough to prevent an interruption of payments to around 100,000 workers. . .

But that’s not how Republicans see it. Here’s what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning’s position (although not joining his blockade): unemployment relief "doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."

In Mr. Kyl’s view, then, what we really need to worry about right now -- with more than five unemployed workers for every job opening, and long-term unemployment at its highest level since the Great Depression -- is whether we’re reducing the incentive of the unemployed to find jobs. To me, that’s a bizarre point of view -- but then, I don’t live in Mr. Kyl’s universe.
3) New York Times Economix blog, August 16, 2010:
Danish studies show that the longer a person goes without a job, the harder it is to find work. Many people get a job within the first three months of entering the system, but many more wait until just before benefits expire to take anything available.

"So you need to have a period of unemployment that is as short as possible," Claus Hjort Frederiksen, the finance minister, told me recently in Copenhagen.

Consider this 2009 chart from Denmark’s Labor Market Commission:

source: New York Times Economix blog

It shows that between 2005-7, the number of people who got jobs during their four years of benefits -- the green line -- rose at the beginning before dropping sharply, then spiked as benefits were about to run out, only to plummet after. The red line shows similar behavior in 1998, when Denmark’s benefit period was five years.
Conclusion: As Steve Adcock at SmallGovTimes says:
Denmark is not alone. Many European nations are struggling with similar budgetary concerns as governments continue to pay their citizens during times of unemployment. The United States’ recent extension of unemployment benefits is the latest example of, as the NYT apparently just learned, social entitlement programs being used to exacerbate these very problems.
Agreed--because incentives matter. But see MaxedOutMama.

(via John Stossel, EconLog)

1 comment:

A_Nonny_Mouse said...

Having been there myself-- You're unemployed. You still have to pay your mortgage, gas and insurance for your car, food, heat & light, any prescription meds....

In other words, you've got a lot of fixed costs as well as discretionary spending. You CAN'T AFFORD to take a job at $9.25 an hour if the unemployment benefits amount to $12.50 an hour. You *DO* keep looking for that "good job" out there somewhere, but surprisingly, the jobs open in your field have a boatload of additional required qualifications that you never managed to pick up in your 20+ years in your field.

You cut back your spending. You cancel your cable. You buy cheaper food. You start stretching your prescriptions ("I can take one every 18 hours instead of one every 12 hours.")

Time goes by. The "good job" never shows up. You deplete your savings. If you're over 59-1/2 you start tapping your IRA; or maybe take a loan against your 401(k). You pray to hit 62 so you can (dammit!!) take early SocSec and get enough coming in from that to pay the mortgage; then you can take the effin' $8.50 per hour job and hope to work your way up to a living wage.

It sucks.