An interesting article on the real costs of extending unemployment benefits

[maxiep]

http://online.wsj.com/article/SB100...5454431457720188.html?mod=WSJ_hp_mostpop_read

 

[EL PRESIDENTE]

it'd be kind of fun sitting on your ass getting $450 a week for 99 weeks if you don't have a lot of expenses. maybe do odd jobs for cash to make ends meet.

 

[barfo]

The administration has argued that the more generous unemployment-insurance program could not have had much impact on the unemployment rate because the recession is so severe that jobs are unavailable for many people. This perspective is odd on its face because, even at the worst of the downturn, the U.S. labor market featured a tremendous amount of turnover in the form of large numbers of persons hired and separated every month.

For example, the Bureau of Labor Statistics reports that, near the worst of the recession in March 2009, 3.9 million people were hired and 4.7 million were separated from jobs. This net loss of 800,000 jobs in one month indicates a very weak economy—but nevertheless one in which 3.9 million people were hired. A program that reduced incentives for people to search for and accept jobs could surely matter a lot here.

I have to say I don't understand the author's reasoning here. If 3.9 million people were hired and 4.7 million were fired, how does that imply that if there were no unemployment benefits, more people would have been employed? Seems to me if there were no unemployment benefits, there might have been a greater competition for those 3.9 million jobs, but that wouldn't have kept the 4.7 million from being fired, nor would it have created more than 3.9 million jobs.

In fact, just the opposite. Unemployed people who are not getting unemployment can't spend much money, so they aren't contributing to the economy, so they aren't themselves creating jobs.

barfo

 

[bodyman5001]

I have to say I don't understand the author's reasoning here. If 3.9 million people were hired and 4.7 million were fired, how does that imply that if there were no unemployment benefits, more people would have been employed? Seems to me if there were no unemployment benefits, there might have been a greater competition for those 3.9 million jobs, but that wouldn't have kept the 4.7 million from being fired, nor would it have created more than 3.9 million jobs.

In fact, just the opposite. Unemployed people who are not getting unemployment can't spend much money, so they aren't contributing to the economy, so they aren't themselves creating jobs.

barfo

You are so silly. If they are homeless, they don't count. DUH

I didn't read it so I can't really comment. My brain can't grasp these things very well.

 

[BLAZER PROPHET]

When I worked for the Employment Dept we took a ton of surveys and one of them noted that over 80% of people receiving unemployment benefits started looking for work when they had 3 weeks left of benefits. Another survey showed that about 60% of people receiving unemployment benefits worked "under the table" so they could receive both. I'm all for unemployment benefits and I even support extensions of benefits under certain circumstances, but this length of expansion is grossly counter productive.

 

[MARIS61]

Until decent paying jobs are made available to legal citizens, unemployment benefits are all that stand between you and a home invasion.

Your call.

 

[julius]

I thought with unemployment you had to actively show that you were submitting applications for job?

 

[barfo]

I thought with unemployment you had to actively show that you were submitting applications for job?

Most unemployed people have so much money that they hire other people to look for work for them. In fact some unemployed people have as many as 72 employees filling out job applications, collecting food stamps, obtaining handicapped parking stickers, spitting on the sidewalks, and littering for them. One unemployed kingpin in Arkansas had the junk cars in his yard gold-plated, at taxpayer expense!

barfo

 

[EL PRESIDENTE]

I thought with unemployment you had to actively show that you were submitting applications for job?

dunno. one of my brother's friends went to asia for 6 months while on unemployment. another went to europe for a month.

 

[Denny Crane]

I have to say I don't understand the author's reasoning here. If 3.9 million people were hired and 4.7 million were fired, how does that imply that if there were no unemployment benefits, more people would have been employed? Seems to me if there were no unemployment benefits, there might have been a greater competition for those 3.9 million jobs, but that wouldn't have kept the 4.7 million from being fired, nor would it have created more than 3.9 million jobs.

In fact, just the opposite. Unemployed people who are not getting unemployment can't spend much money, so they aren't contributing to the economy, so they aren't themselves creating jobs.

barfo

Unemployment benefits are a two-edged sword. If we want govt. to be a safety net, and people while working paid for unemployment insurance, then they should get benefits while unemployed. But the time people are unemployed shouldn't be an extended one, nor should the unemployment benefits be a disincentive to finding work.

In 2000, Clinton's last year in office, the stock market tanked and wiped out $trillions in peoples' net worth. The economy shed a lot of high quality jobs as dot bomb companies went under. The housing market tumbled. Yet people hung onto their homes, rather than selling at a loss, and they found a way to form real companies (e.g. profitable) in garages.

When you can make $2000/month in unemployment benefits or $3000 working a job, I think a lot of people would rather not work and take the $2000. Especially when there's no end in sight to those $2000/month payments.

 

[BLAZER PROPHET]

I thought with unemployment you had to actively show that you were submitting applications for job?

That is still the policy, but there is no time to check on the recipients.

Here's my concern- at $450/week, it equates to $11.25/hr. Plus, there are other benefits to being on unemployment assistance. When that is extended indefinitely, where is the stimulus to work? Why take a $9 or $10/hour job when one can have more not working? While I approve of extending benefits, I'd like to see them decrease every 26 weeks to give recipients more of a push to take what they can find.

Now, I realize that $450 per week is the max benefit and not everyone receives it. Many get less. But the same principle is reasonable to those making less than the max. It is unfortunate, but at some point in time the assistance has to be stopped. I know, I've lived in a car before when I was younger and I was grateful for what I got. But losing benefits got me looking hard for work- any work. I found a night janitor job, got back on my feet, got back to college and got the hell out of that car.

 

[Paxil]

There are certainly a lot of hard working people with good skills that get laid off because of a downturn in the economy etc... but there are also people that get the boot because their jobs just are not needed anymore. If you make widgets and no one wants widgets (or China starts making them cheaper), then you may need to think about a new profession.

Jobs flow from industry to industry and at times you just have to go with the flow. I've known some friends that sat without jobs for a long time because they only wanted to do one thing... when there are a ton of jobs available in health care etc...

Check out fastest growing professions... most of them seem to be associated with health care:
http://www.bls.gov/emp/ep_table_103.htm

 

[Paxil]

But the time people are unemployed shouldn't be an extended one, nor should the unemployment benefits be a disincentive to finding work.

It has to be pretty extraordinary circumstances (and I guess we did have them) but I agree in general that you should not extend benefits, and I think they should go ever further to try to help people get back on their feet.

 

[BLAZER PROPHET]

... but I agree in general that you should not extend benefits, and I think they should go ever further to try to help people get back on their feet.

When I worked for the State & Feds Clinton hatched a great plan. The workers at the Employment Office would be granted extra authority to place unemployed into technical programs while they continued to get benefits. It was the best idea we had ever seen. However, Congress shot it down in flames and the money continued to be wasted.

 

[mook]

I wonder if it would be possible to use the internet to have people on unemployment audit other people's unemployment.

To get $x cash for six months, use the current system.

Alternate system: You have to maintain a blog about your job hunting/continuing education. You are also randomly assigned 12 unemployed peers, and you are required to weekly grade their blogs on a curve (three A's, three B's, three C's, three F's). They won't grade you, so there's no reciprocity. They can ask questions on their peers' blogs, offer tips, etc. On your blog you can post resumes, job applications filled out, school work, etc to prove your work. Those who average an A grade get 50% bonus. B grade 25% bonus. C grade 10% bonus. F grade no bonus. (Or maybe you adjust the grading.)

My thinking is you incentivize people to job hunt/improve themselves, and educate themselves about how others do it.

 

[MikeDC]

I've mentioned this before, but the Barro article is pretty compelling. The idea is that there are certainly jobs available. I see help wanted signs all over the place. But a reasonable person would certainly prefer to collect about the same amount and not have to go to a boring, tedious, low social status job.

I sympathize with a reasonable person in those situations, but certainly not to the extent I think it's ok for everyone else, the folks are actually out busting our asses working, to have to pay for them.

It's a strange thing in our society (and you see the sentiment in this thread) that many folks think they're "too good" to work a working class job, and yet, attach no social opprobrium to living off other peoples' money. In a better world, the folks who are most sentimental about helping the real working class folks in this country wouldn't be such snobs and wouldn't detest them so much.

 

[MikeDC]

I wonder if it would be possible to use the internet to have people on unemployment audit other people's unemployment.

To get $x cash for six months, use the current system.

Alternate system: You have to maintain a blog about your job hunting/continuing education. You are also randomly assigned 12 unemployed peers, and you are required to weekly grade their blogs on a curve (three A's, three B's, three C's, three F's). They won't grade you, so there's no reciprocity. They can ask questions on their peers' blogs, offer tips, etc. On your blog you can post resumes, job applications filled out, school work, etc to prove your work. Those who average an A grade get 50% bonus. B grade 25% bonus. C grade 10% bonus. F grade no bonus. (Or maybe you adjust the grading.)

My thinking is you incentivize people to job hunt/improve themselves, and educate themselves about how others do it.

I'm a little creeped out by the prospect of folks reporting on each other.

The best proposal I've seen would be a system under which most folks get to continue to receive their benefit for a stated duration after they become employed. Thus, you continue to help them, but you don't remove the incentive to work. So, if you get 99 weeks of unemployment, you can still get it if you get a job.

The problem with this is you will have to set up pretty strict requirements against gaming the system. Like, you can only receive unemployment benefits for one session of unemployment, and if you lose your next job, (and have chosen the lump sum plan), then you either get no unemployment or drastically reduced unemployment.

EG, if you're unemployed, then go out and get a job, you still get benefits to help you back on your feet for a couple months. However, if you lose that second job, you will get only absolutely minimal benefits the next time you apply for unemployment

 

[mook]

I'm a little creeped out by the prospect of folks reporting on each other.

We already do this, except it's done poorly by faceless government bureaucrats who probably haven't job-hunted themselves in decades.
I look at it as putting unemployed people immediately to work. You are auditing other unemployed people's efforts at finding a job using real world experience.

The best proposal I've seen would be a system under which most folks get to continue to receive their benefit for a stated duration after they become employed. Thus, you continue to help them, but you don't remove the incentive to work. So, if you get 99 weeks of unemployment, you can still get it if you get a job.

The problem with this is you will have to set up pretty strict requirements against gaming the system. Like, you can only receive unemployment benefits for one session of unemployment, and if you lose your next job, (and have chosen the lump sum plan), then you either get no unemployment or drastically reduced unemployment.

EG, if you're unemployed, then go out and get a job, you still get benefits to help you back on your feet for a couple months. However, if you lose that second job, you will get only absolutely minimal benefits the next time you apply for unemployment

That sounds like a pretty smart system. I think you wouldn't want the government to send out the lump sum in a single payment, though. Too tempting to blow it all and then whine about being broke. Instead pay it out over the period of time.

However, as somebody who has the same employer for over a decade, I know I'd be tempted to quit and collect unemployment under such a system. Use business contacts to arrange a new employer after a month or so. Bam, I get 150% of my pay! It could be gamed....

I think that's what I like about my idea. You pay people based on effort put out as judged by others also putting effort out. It's hard to see how my system could be gamed.

 

[mook]

Regardless which you do, or if there's a third even better solution, I wish the debate focused more on these alternative ideas than on "cut spending!" and "spend more!"

People get so caught up in left/right, right/wrong, that they lose sight of smart/stupid. There's a lot of stupid things our government could do more intelligently that should have little to do with ideology.

 

[chris_in_pdx]

Regardless which you do, or if there's a third even better solution, I wish the debate focused more on these alternative ideas than on "cut spending!" and "spend more!"

People get so caught up in left/right, right/wrong, that they lose sight of smart/stupid. There's a lot of stupid things our government could do more intelligently that should have little to do with ideology.

Except that there are people who think government should be doing little or nothing at all. These people don't live in the real world, but you can't tell them that. They think that the extra few hundred dollars in their pocket every month will be enough to replace all of the social services and safety nets that government supplies today. Or, they just don't think about that.

 

[Nate4Prez]

I don't think we should give the unemployed incentive to find work. I think we should give the unemployed a disincentive to be unemployed. Once someone signs up for unemployment, the government direct deposits the funds into your account. Instead, issue a check, that has to be picked up every Tuesday at the local unemployment office. When picking up the check, the unemployed must present paperwork showing they applied for five jobs in the last week, all signed by an employer. On the check, in big writing at the top, say "This Check Is For The Unemployed. It Is Paid For By U.S. Citizens Who Have Jobs" People living off unemployment for longer than two months should be listed online, like sex offenders. That way you know the people in your neighborhood who are living off your money. Finally, taxes for the person who lived an unemployment will be increased until all the money they used is paid back.

 

[blazerboy30]

Except that there are people who think government should be doing little or nothing at all. These people don't live in the real world, but you can't tell them that. They think that the extra few hundred dollars in their pocket every month will be enough to replace all of the social services and safety nets that government supplies today. Or, they just don't think about that.

No doubt! We are so lucky this country was able to scrape by for the last 230 years without a huge, overbearing government. Yep, those in the "real world" ignore the fact that as the government has grown, along with the amount of "social services" and "safety nets", our debt and deficits are going to cripple this country.

 

[The Professional Fan]

I've been receiving unemployment since February. I actively look for jobs every week. I worked in High Tech. All my experience is in the industry. That industry is not easy to get back in to right now. I survived 20+ rounds of layoffs during my 14 year career in the industry. That's a shit ton of people looking for jobs in my industry, with a lot of my same skills, and, unfortunately for me, most are more educated than myself. At least, they can prove as much. Haha.

I hate taking benefits. Hate it. I've applied for around 150 jobs I'd guess. Maybe a little less. I've had a handful of interviews. I can count them on one hand.

I guess my point being, I can see how someone could EASILY take advantage of this system. It would take no effort at all. You can lie about searching for a job and no one would know the difference. Once you receive an extension of benefits (probably the 3rd extension "High Extended Benefits") during your weekly claim you have to list three jobs you applied for instead of just answering the question "did you actively look for work this week?" I would imagine you could fib your way through this as well (haven't gotten that far yet).

I'm not taking advantage of the system, but I'd be hard pressed to believe that I'm in the majority. But I could be wrong.

Anyone hiring?

 

[Nate4Prez]

I hate taking benefits. Hate it. I've applied for around 150 jobs I'd guess. Maybe a little less. I've had a handful of interviews. I can count them on one hand.

Anyone hiring?

If/When you find a job are you okay with paying 10% more taxes until you have repaid the money you have lived off of for the last 6 months?

 

[The Professional Fan]

If/When you find a job are you okay with paying 10% more taxes until you have repaid the money you have lived off of for the last 6 months?

Correct me if I'm wrong, but while working since 1994 wasn't I paying for these "benefits" through the taxes I was paying? I'm not sure exactly how that works, but in principle alone, yes, I would be willing to pay 10% until it's all repaid.

 

[Nate4Prez]

Correct me if I'm wrong, but while working since 1994 wasn't I paying for these "benefits" through the taxes I was paying? I'm not sure exactly how that works, but in principle alone, yes, I would be willing to pay 10% until it's all repaid.

You're not wrong. You certainly have paid for many other people's unemployment as well. I'm just throwing ideas out there on how to limit the length a person spends on unemployment. If it was understood, that you had to pay back a portion of the funds received while on unemployment, it may deter people from staying on it for 99 weeks.

None of this specifically addresses towards you.

 

[The Professional Fan]

You're not wrong. You certainly have paid for many other people's unemployment as well. I'm just throwing ideas out there on how to limit the length a person spends on unemployment. If it was understood, that you had to pay back a portion of the funds received while on unemployment, it may deter people from staying on it for 99 weeks.

None of this specifically addresses towards you.

Totally understood. I actually think that's a pretty good idea, FWIW. I believe in paying my dues, and I believe in taxes. Unfortunately, I don't trust how my government uses the taxes! Love the concept, hate the execution.