It’s important that people experience the full consequences of being unemployed or they will come to love unemployment and stick with it.
A large body of economic evidence suggests that extending unemployment benefits increases unemployment and keeps people out of work longer.
This is because workers are less likely to look for work, or accept less-than-ideal jobs, as long as they are protected from the full consequences of being unemployed.
That is not to say that anyone is getting rich off unemployment, or that unemployed people are lazy. But it is simple human nature that people are a little less motivated as long as a check is coming in.
Maybe we should ask why we have unemployment insurance at all. If you can’t hold a job then you probably don’t deserve to have a home. I think it’s always your fault if you get fired, even when your entire plant closes down and moves to another country. You were getting too much compensation, obviously. If not, then why would your employer move to find cheaper labor?
I’d like to see the Cato Institute do a study on the social ramifications & associated costs of high unemployment rates without a safety net.
Ha ha. Sorry. I forgot that this doesn’t perpetuate a Republican talking point.
I won’t click on CATO links, so what studies do they actually cite?
Again, it makes the CEO Jesus cry when we go putting the godless government between the holy ghost of the free market and the economic outcomes people have deserved through their entrepreneurial spirit or lack there-of. How can they really come to love the CEO Jesus, darkness of the soul-like, when some godless minority type is handing out checks, paid for by taxes stolen from honest hardworking people like Bob the multinational corporate polluter? Plus you know those bums are just gonna go buy pot, disrespect police officers and just generally depress real estate prices.
I’m sure this woman would agree.
Yes, a paltry $250 a week keeps peo0ple from working, but if bankers don’t get eight figure bonuses they will quit working because $500K a year isn’t enough to live on. Republican logic.
As a person who is currently unemployed, and who emphatically does not wish to remain so, I’m facing the end of my benefits pretty soon. I was laid off in January, and most likely will only be eligible for a total of six months of benefits if Congress does not pass the federal extension.
At this time, as I continue to search for a job and start to acclimate myself to the likelihood that I will need to take a significantly lower paying or part time job in order to survive, I am remaining positive. I am thankful that I don’t have anyone depending on me, and that I won’t wind up on the street one way or the other. I’m lucky enough to have family and friends with couches, floors, etc. I’m lucky to be employable in a few different industries, in case my job of choice doesn’t materialize.
So when I read statements about unemployed folks and why they should be cut off ASAP, I don’t so much get mad for myself or my own situation. I think of the folks who have little kids, heck kids of any age. I think of the folks who have chronic illnesses and, despite the “health care reform” that was passed, are STILL crippled by those payments, the alternative to which is a slow, painful death. I think of the folks who were already struggling while they had jobs. I think of the quiet dignity of these people who try to remain upbeat, if not within their own hearts then at least outwardly; those who suck it up and remain strong for those who depend on them.
And then I think of the politicians callously playing keepaway with peoples’ physical, mental, and emotional well being; playing keepaway with peoples’ futures. I think of the gilded lives they live, their insurance and their pensions. How comfortable they look in their air conditioned limousines and offices, while those who form the backbone of this country swelter because they can’t afford to turn on their goddamn air conditioners. And if they live on the Gulf, they can’t even go to the fucking beach.
I’m not the only one thinking about these things. If we end up with a huge portion (an even huger portion than currently) of our population out of work and desperate, we’re going to be set up for social upheaval on a scale this country hasn’t seen before. I am a nonviolent person, I believe in nonviolence. But there will be demonstrations, and some people will not share my beliefs. Many people.
Everyone, from the top on down, has a direct, pressing interest in ending this economic catastrophe as soon as is humanly possible. If you’re not going to extend the safety net that keeps kids fed, bills paid, and illnesses treated, then you damn well better create some jobs for the common folk and it better be soon. Otherwise, I’m not sure what kind of country this is going to be in a few more years, or what our communities will look like, or where these corrupt bureaucrats all expect to sleep at night.
Couldn’t have said it better. Good luck.
I’ll bet that author’s job could easily be done by someone in India or China for less than a third the cost the Cato Institute currently pays him. Perhaps we could help him practice what he preaches.
More like 1/12th the salary – that’s what the person in China who took my job was paid.
Translation: A lot of Cato Institute and Heritage Foundation screeds by folks who found that wingnut welfare was a great way to feed the family (and who never studied any economics at all) suggests…
Economic evidence does not suggest that at all. Full stop.
What my observation suggests is that Wall Street has a financial interest in promoting labor-cost cutting in corporations over all other forms of cost-cutting. And guess what? That results in unemployment. But that’s OK because the economy needs unemployment to keep the labor market from freezing up at high wages. So Wall Street signals downturns with its labor market forecasts. In 1998 wages had begun to recover from the Reagan and Bush recessions. The high-tech market was booming. The internet was spreading and increasing speeds. And Wall Street began fretting about whether the telecoms could make enough revenue to afford extending broadband to the door, and began downgrading telecoms. Just prior to that, there were a number of articles about a tight labor market causing inflation.
In 2007, there were a series of articles worrying about the recovery of the labor market causing inflation. Thereafter, folks began fretting about a housing market that had looked like a bubble for several years. Some analysts and bloggers (Hale “bonddad” Stewart was one) had been warning about the housing market from about 2005. But the conventional wisdom was that nothing was amiss. But in 2007 just as wages were rising again, Wall Street decided to spike the bubble. The irony is that those rising wages could have provided the basis for lowering the risk of default on housing.
Unemployment fundamentally is something that Wall Street decides should be there and how much can be tolerated. There was a time when Wall Street worried about 5% unemployment. Now 10% is not enough to get these financial geniuses to invest or have government stimulus invest in getting the economy going again.
And the supreme illustration of the pandemic of incompetence that has gripped the country is that these wealthy folks have no clue of how much more wealthy they could be if they ensured that ordinary folks were wealthy too. For that was the real social contract that came out of the New Deal and held until conservative ideas recaptured business management.
And their incompetence is never rewarded with unemployment….ever. And neither do the pseudo-economists like Michael Tanner. I would very much love for these folks to experience the full consequences of unemployment in which they are considered “overqualified” to work flipping burgers or cleaning up construction sites. And for that unemployment to be involuntary, last for years past their unemployment benefits and savings run out.
“…these wealthy folks have no clue of how much more wealthy they could be if they ensured that ordinary folks were wealthy too.”
While it’s entirely possible that incompetence is responsible for this strange situation, I think it’s important to at least consider alternative hypotheses. As I often find myself arguing with folks on left and right, it’s emphatically not just about money. Money is a facet of power, not the other way around. Even where greed is at issue, there is greed for power just as there is greed for money.
For the truly enlightened, power is the real goal. Money is a byproduct of power, to be sure, an antecedent, but for many it is not an end in itself. Power.
Another essay in the self-destructive effects of hubris.
I wish we could separate theories like this from the self-interest of most of the politicians and pundits who publicly state them, because I actually believe this one. In fact, if we were looking at the issue objectively, I’d expect most of us to agree that getting a regular check in some proportion to your wages acts as a disincentive to some degree to looking for work.
The problem comes when we address the consequences of holding this theory: do we end unemployment? do we stigmatize people who receive it? do we reduce its amount? I don’t think we should do any of these things. But these policies aren’t the subject of the quote; they’re projections onto its author. Since the source is the CATO Institute, the projection is a good bet. But the quote in and of itself? I don’t see anything wrong with it.
I don’t agree and I’ve been there. My first week being unemployed, I contacted temp agencies for pickup work — inventories, construction site cleaning, clearical — stuff I’d done in the past between jobs. As soon as they found out I had a college degree, they told me I was overqualified and refused to consider me for anything except the specific thing I had been doing. And of course there were no opportunities there because the collapse of the market for my skills was why I was laid off. It was three and a half years before I was hired again — and then it was because the market for my skills had turned around.
Unless you have evidence that it is true, it could very well be intuitive and flat out wrong.
We not only stigmatize people when they are unemployed, we stigmatize them for years afterward. Most resumes are have clever ways of disguising the periods that people were unemployed. If you are too honest you might never work again.
And virtually everyone I talked to at job fairs then was having the same experience.
Your experience contradicts the theory (and I’m sorry to hear it) but it doesn’t refute it. I know of two equally personal experiences of people who waited until their severance package or unemployment ran out before looking for work. But more importantly, there was a study years ago when the economy was good that showed that people’s re-employment was significantly correlated with the end date of their unemployment benefits.
For unemployment benefits to work as a disincentive doesn’t require it to prevent re-employment or to work as a disincentive to everyone. Actually, the funds probably make it possible to fund the job search for a lot of people. But I wasn’t at all surprised by the study’s findings.
I’m sorry, this is just silly. Most unemployed Americans, the vast majority I would venture, can’t wait until their checks run out to find work. When the checks run out, that’s when bills come up past due. That’s when food gets scrimped on. That’s when loans get taken out, if you can get them. That’s when credit cards get maxed out. I’m not refuting your vicarious anecdotal experiences, but there is no way you can make a straight-faced argument that those people are in any way representative of the greater body of unemployed in this country.
If re-employment is correlated with end dates, that could be because people take shittier jobs out of desperation. And their quality of life slides significantly, they can’t afford preventive healthcare, etc. I see what you’re trying to say, I just don’t think it holds much water.
I didn’t say my experience refuted the theory. I just asked for evidence that proves the theory, and so far there is none. I didn’t think my anecdotal evidence is proof; you anecdotal evidence is not proof either.
And it’s much easier to judge people from the outside. How do you know what your examples did when you were not looking. It is tempting to put on a brave face.
And the behavior of people in good times is marked by a form of denial. Some think they’re so good and times are so good that those folks who seemed interested in them will just snap them up. Reality breaks slowly in good times. In bad times, folks are polishing up their resumes even as other people are being laid off.
The fact of the matter is that in this current economy, there are large numbers of people who will be going without income for years unless policy changes. How will they survive? Kindness of friends for a while, gray economy, black market, crime, and then there will be the ones who drink themselves to death or commit suicide. And there are long-term studies of unemployment reaching back to the 1950s that show that divorce goes up, crime goes up, suicide goes up, illness goes up with long-term unemployment.
It is very convenient for those who have never been unemployed to think that folks who are unemployed are enjoying their “vacation from work”.
Finally, any study that comes out of the economics profession within the last 30 years and purports to examine the incentives in unemployment is ideologically suspect because of the overweening influence of the Chicago school and Milton Friedman.
The story about unemployment insurance being a disincentive to finding work comes direction out of the naive assumption that if you pay for something you will get more of it. It depends on what “it” is. And that goes to the elasticity of supply and demand. Like I said, something can seem intuitively true and be absolutely wrong.
That said, unless you have been involuntarily unemployed yourself, you are going way out on a limb asserting what are incentives and what aren’t to people who are unemployed. Especially in a time of high unemployment.
And the motive of the Cato Institute in publishing opinions like the one cited is to end unemployment insurance and let people just starve just so employers do not have to pay unemployment insurance taxes. And that is not hyperbole.
The main point of my post was to express a wish that we as liberals could talk about the issue of unemployment compensation in a way that was objective, not personal, but without the selfish motives that informs discussion of the issue among ideologues from the CATO institute. It seems like that’s as difficult to do as I thought it would be.
Is there a liberal community in which we can entertain the possibility that unemployment benefits can have any disincentive on looking for a job for any proportion of its recipients? That its function as a disincentive is nonzero?
And how do we discuss that if you say that a) my anecdotes will always be trumped by your anecdotes; b) I need to offer proof beyond anecdotes; and c) any study from the economics profession within the last 30 years is suspect?
I don’t dispute the influence of ideologically-driven studies. Searching on “unemployment” and “disincentive” turns up a lot of studies and I won’t reference any of them without knowing more about their possible influences. So I can’t offer anything further to this conversation now.
Except to say that the quickness with which my post is viewed as a personal affront is exactly the approach I would like to avoid. My only personal statement is that I wish you well.
You ask:
“Is there a liberal community in which we can entertain the possibility that unemployment benefits can have any disincentive on looking for a job for any proportion of its recipients?”
I addressed this here:
“I’m not refuting your vicarious anecdotal experiences, but there is no way you can make a straight-faced argument that those people are in any way representative of the greater body of unemployed in this country.”
To your other sentiments, I would just say that the question of unemployment benefits is a very emotional one for lots of folks right now. Don’t be surprised about that. Further, I think it’s far less useful to question the effect of peoples’ safety net. If it keeps them from dire poverty and the consequences thereof, that function outweighs the small percentage of folks who don’t seek employment as heartily as they otherwise might.
And, again, we have to remember people will take, out of urgency, jobs they can’t actually support themselves or their families with. They are vastly more likely to take significantly lower paying jobs to keep some money coming in. Mortgage defaults, credit problems, and overdue bills spike harshly for this segment of the population. That skews your statistics about the conjectural chronological correlation between the end of benefits and re-employment.
Isn’t it more useful to suggest constructive reforms for the system than to try and justify the cessation of benefits? How about better funded, bigger jobs programs? A tough thing about unemployment is that there aren’t terribly many jobs out there right now… Let’s address that.