Posted on 04/18/2010 7:55:20 PM PDT by 2ndDivisionVet
Do unemployment benefits cause unemployment? Do long term benefits prolong the length of unemployment? If you ask President Obama's Chief Economic Adviser Larry Summers the answer would be yes. He outlined his case in a paper currently on line at the Library of Economics and Liberty. To be fair he has stated he no longer holds these opinions. Seems he has changed his mind since getting his current job in the Obama admistration. Before joining the administration Summers was the Charles W. Elliot University Professor at Harvard University. He was previously the president of Harvard University. Prior to that he was Secretary of the U.S. Treasury. Still he makes some interesting points. Here are some quotes from the article:
..."unemployment insurance extends the time a person stays off the job."
..."another cause of long term unemployment is unionization. High union wages that exceed the competitive market are likely to cause job losses in the unionized sector of the economy."
..."There is no question that some long term unemployment is caused by government intervention and unions that interfere with the supply of labor."
..."by providing an incentive, and the means, not to work. Each unemployed person has a "reservation wage"- the minimum wage he or she insists on getting before accepting a job. Unemployment insurance and other social assistance programs increase that reservation wage, causing the unemployed person to remain unemployed longer."
Here are some important points Summers makes in the paper:
unemployment insurance extends the time a person stays off work.
unemployment benefits are expensive for taxpayers According to Summers taxpayers as a group are paying $8.25 per hour in unemployment benefits to the unemployed.
Unemployment rates are higher in states with high unionization. The rate is on higher 1.2 percentage points higher than states with low unionization rates.
Congress will decide this week whether to extend benefits. For some these benefits have already extended 99 weeks. These benefits no doubt are providing a safety net to those in some cases desperately looking for work. There are some other things to consider:
How will we pay for these extended benefits? We are already running record deficits that will cause long term economic problems. It is time to start making some tough choices to cut spending.
The longer you are out of a job the tougher it is to find a job. Employers start to believe your skills have eroded. Keeping people on benefits for extended periods of time may make them forever dependent on government assistance.
Long term benefits change behavior. Will we ever go back to the old program of 24 weeks of benefits? We need Americans to set aside money in an emergency fund for an event like unemployment. Workers need to be prepared to help themselves through job loss.
Perhaps in exchange for extended benefits we require those getting benefits to provide community service or other volunteer work. We would get something of value for their benefits and they could be doing work that will keep their skills active. That may be a win win for both sides.
We are not slaves to our jobs because we can choose to leave them to work for another.
Requiring ‘community service’ to receive unemployment benefits is indentured servitude. We don’t want Zero to raise his army do we?
I’ve been unemployed since December of 2008. However I started my own business and I now tutor students.
Does a bear.......
Yes. Case in point: My ex has turned down multiple job offers because she gets more from unemployment after taxes.
Pop quiz, who said this?
“A large proportion of these unemployed and their dependents have been forced on the relief rolls. The burden on the Federal Government has grown with great rapidity. We have here a human as well as an economic problem. When humane considerations are concerned, Americans give them precedence. The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fibre. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is in violation of the traditions of America. Work must be found for able-bodied but destitute workers.
The Federal Government must and shall quit this business of relief.”
That was that lying sack FDR, wasn’t it?
Yep, it was proof that even he knew what the result of the New Deal was going to be.
I’m guessing President Franklin Delano Roosevelt.
The only people I know who received unemployment chose not to look for work until their benefits ran out.
When I was young and had no responsibilities, I was laid off from my first big job. I got my next job the exact same day I got my last unemployment check. It would have been the same no matter how many weeks I had.
Yes, because it doesn't give people an incentive to find work, since unemployment benefits are renewed every few months.
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