And yet, by constantly extending unemployment benefits, government provides ever greater positive incentives for those who have lost their jobs to remain unemployed for ever longer periods of time.
As a number of economists have shown, when unemployment benefits are extended, someone who has lost a job -- e.g., an engineer -- is further incentivized to remain unemployed until he has found another engineering job. That job might not actually exist. What the economy -- and the unemployed engineer, by the way -- really needs, however, is simply for the unemployed engineer to get off the public dole system and to start pulling his own weight. That might require that he accept a less-than-ideal job, perhaps on a production line somewhere.
Let's think this one through for a moment. An AVERAGE engineer makes around 70-90K/yr, or $1,350-$1,750/week before taxes. You are stating, as fact - that he is going to feed his family, make his house payment, provide medical care, pay his utilties, make his car payments on $346/week (maximum unemployment in many states)?
I think you are horribily mistaken - what he will do is lose his house, lose his car, lose his retirement and savings and declare bankdruptcy and hopefully not lose his marriage and self-respect. Anyway you look at it; his life's savings, his retirement, his 401K is gone and likely will never come back in any meaningful way.
Now, a person making ~$20K/yr is in a much better position to economize and survive off welfare benefits.
Interesting point.
Another part of the problem, however, is pay: If an engineer making $84,000 a year is laid off and then gets $523 a week in UE benefits, and can only find jobs paying $9.40 an hour, he’s better off not taking the job.
Now, the problem of high paying jobs being harder to get over time is a seperate issue, but as far as the UE benefits issue is concerned, the above scenario keeps a lot of people on the dole.