Jobless benefits: Do they backfire?
A study of unemployed workers in Pittsburgh in the early 1980s found that a third of those on unemployment suddenly found work as their benefits expired.
Congress just voted to keep tens of thousands of people unemployed, said Amity Shlaes in Bloomberg.com. Lawmakers may not have realized they were doing this last week, when they extended jobless benefits for Americans who’ve been out of work longer than 46 weeks. To Democrats, extending about 200,000 jobless workers’ benefits to 99 weeks—which will cost taxpayers $18 billion—seemed “humane and necessary.” In reality, however, it’s counterproductive. By easing the burdens of unemployment, the government dampens the incentive to hunt for a job. A study of unemployed workers in Pittsburgh in the early 1980s—during the nation’s last major recession—found that a third of those on unemployment suddenly found work as their benefits expired. Many of those who’ve lost jobs need to obtain new skills, go back to school, or move elsewhere, said Ruben Navarrette Jr. in The San Diego Union-Tribune. But when these welfare checks keep arriving for two years, why take such a dramatic—and ultimately positive—step?
Nonsense, said Bob Herbert in The New York Times. People are out of work so long for one simple reason: There aren’t enough jobs. More than 8 million jobs vanished during the recession, and just to keep pace with population growth, we would have needed to add 3 million jobs during that period. That’s why “corrosive, intractable, demoralizing unemployment” is so widespread. Extending unemployment benefits is not only humane, it helps the entire economy, said Ruth Mantell in The Wall Street Journal. When people get those checks, they spend them—keeping the consumer economy afloat. Besides, with benefits averaging less than $350 a week, it hardly seems likely that the unemployed “are content financially or intellectually.”
Don’t be so sure, said Reihan Salam in TheDailyBeast.com. For many Americans, “unemployment is more pleasant than it used to be.” For starters, there are far more two-earner households today than during the last steep recession. That second income provides an “economic cushion” in the event one spouse loses a job. At the same time, unemployment benefits have grown more generous, making it possible for unemployed people to refuse to settle for lesser jobs with smaller salaries than they used to make. These folks suffer from the delusion they’ll regain their old salaries in “a sunnier labor market.” They probably won’t—which is why giving them two years of benefits isn’t doing them any favors.