Skip to comments.Do Unemployment Benefits Stimulate the Economy?
Posted on 07/20/2010 5:47:29 AM PDT by MichCapCon
With the expected appointment of an interim Senator in West Virginia, Democrats in Washington are hoping to push through an extension on unemployment benefits. Under current law, benefits run out after 99 weeks (up from a previous record high of 65 weeks in 1975).
There's valid argument that a compassionate society with a dynamic economy should provide unemployment benefits, and a legitimate debate regarding how much and how long. But recently, some have gone beyond this and argued not only that these benefits are necessary, but that they actually stimulate the economy.
Most notably, White House Economist Lawrence Summers claims that not extending the unemployment benefit beyond almost two years would cost the U.S. economy $10 billion and 100,000 jobs.
Some center-left economists have calculated that Michigan will miss out on $205.6 million in "economic stimulus." And columnist Jackie Headapohl writes on Mlive.com that, "Unemployment insurance puts money in the pockets of the families most likely to spend the money which in turn expands the economy and creates jobs."
So is this accurate? Does government money in the form of unemployment benefits expand the economy?
(Excerpt) Read more at mackinac.org ...
Let’s see, theft of resources from the producers, transferred to the non-producers. What could possibly go wrong?
“Do Unemployment Benefits Stimulate the Economy?”
Oh, there you go asking softball questions again...
I don’t understand why media reports always focus on the 99-week eligibility period - this is entirely dependent upon WHEN you got laid-off. If you got laid-off recently, you’re done after 26 weeks now, period. The only people who got 99 weeks were those who got laid-off 99 or more weeks before this June.
I got laid-off last November, and when the extension expired in June, so did my unemployment.
Note: I’m not complaining about this or asking for another extension. Extended benefits IS a disincentive to actually finding work. Of course, that is EXACTLY what this government wants - a large population of unproductive voters who are dependent upon government checks.
nancy pelosi says so therefore, no.
Follow the money:
The US borrows money from China to pay unemployment benefits.
The government disperses the checks to he unemployed.
The unemployed go to WalMart, Target, etc., and spend the money.
WalMart and Target restock their inventory of the items purchased by the unemployed by ordering more goods from China.
So much of the money goes back to China, making a profit for the Chinese.
The original loan from China has not been paid down and interest on it is still accumulating.
Yet China has a large portion of their own money back and at a profit.
This is the way to prosperity?
I compare it like a person grabbing a container they think was a fire extinguisher to put out a fire on someone but..
Its really a can of pepper spray.
My favorite subject. If this is really true then how can the debt commission recommend cutting entitlements? Doesn't social security create jobs like this compensation does? It is all bogus. No, not all tax cuts pay for themselves either. More on this later.
Why do people parrot stupid leftist terminology like "stimulate" when it comes to the economy?
The economy isn't robust because its been "stimulated" or "tickled" by the government. Pay attention class.
Government creates poverty.
The free market creates wealth.
Government produces nothing and never has or never will create wealth - it can only act as either an agent to protect the free market or an agent to retard the free market and hurt the economy.
One way to stimulate the economy is to stop paying people to sit on their butts. Make them go out and get a job. They may not find the perfect job but let them work while they are looking. If they can not find a job in two years they are not looking.
the writer is in Michigan, where I believe they ARE the economy
Most notably, White House Economist Lawrence Summers claims >that not extending the unemployment benefit beyond almost two years would cost the U.S. economy $10 billion and 100,000 jobs.
LOL! Some people are so stupid that a public hanging is in order. - no sarcasm intended at all.
If this is the case, then why stop there?
Just extend unemployment benefits to everyone in America & our economy will be ZOOMING!
So listen up America! Quit work now! Save the economy!!
This is like saying that drilling a hole in the bottom of a boat will let out the water faster.
no ...its to buy votes.
“Why do people parrot stupid leftist terminology like “stimulate” when it comes to the economy?”
Thank you, thank you, thank you. All this stimulus/quick fix talk is rather adolescent. Economic growth and prosperity are a function of work, savings, investment, production. Stimulants produce temporary illusory results and long-term damage. It took decades to destroy our economy and it will take longer than a quarter to restore it.
"So is this accurate? Does government money in the form of unemployment benefits expand the economy? "
This is a rhetorical question, right?
Yes indeed. My husband and I have been unemployed for a little over a year. We spent all of our savings trying to start a business and failed due to poor timing (buying had stopped at that time.) We lost everything. It all went into the economy.
Last month a venture capitalist we had contacted before, finally gave us a call. We were up and running in two days. Within 3 months, we will have paid more taxes than we took in unemployment. If it hadn’t have been for unemployment, we would have been in a homeless shelter, another home to add to the repo number, and still sucking soup in the line.
You idiots that think people should starve in this economy... hard-working people, such as this family, that if the truth were known probably paid more taxes in our lifetime than some of you “produced” disgust me. You are green with envy that some of us have suffered with the measly check we received once a week that just barely kept us afloat so that we could get back on our feet.
At least I have the satisfaction of knowing we made it... and many of you will be getting your just deserts someday.
No. Next question?
But what really frosts my cupcakes is that so many people in positions of leadership do not accept the simple truth that socialism is an utter and epic failure.
I’m with you. There’s ivory tower types all over here saying unemployment benefits are ruining their lives. Well, if they gotta ever really need them they’ll have a quick change of heart.
I’m suffering through similar dumps now, but I’ve mostly worked for 13 years fairly well except for awhile after 9/11 when the tech sector bombed here.
Also, I don’t think it’s supposed to be a ‘stimulus’. That was really stupid for Pelosi to say in general. It’s a lifeline, plain and simple.
I was on U.I.once for ten weeks.In that time I did nothing to stimulate the economy. I used the money for paying bills and buying absolute necessities.No one on UI thinks, or should be thinking, about a new dishwasher, gas grill, trip to the Cape or anything that is not a necessity. Buying hamburger,pasta, toilet paper, and soap is not going to jack the GDP in any meaningful way. This argument for continuing UI past 99 weeks is not only arguable, it’s completely bogus.
They aren’t arguing for past 99 weeks now, when you see ‘tier 5’ mentioned that’ll be past 99 weeks. This stuff going on right now is just to fund tiers 1-4 which only cover 26-99 weeks still.
“You idiots that think people should starve in this economy... hard-working people, such as this family, that if the truth were known probably paid more taxes in our lifetime than some of you produced disgust me. You are green with envy that some of us have suffered with the measly check we received once a week that just barely kept us afloat so that we could get back on our feet.
At least I have the satisfaction of knowing we made it... and many of you will be getting your just deserts someday.”
I understand you and millions of others are/were in a difficult situation. We have a well established UI system to provide some level of help during difficult economic times. The issue is not the basic UI system but the seemingly endless extensions at least for some.
I believe that these extensions are bad policy. Of course, we have a government running on bad economic policies. The bad policies are feeding the unemployment problem. These extensions are morphing into a huge new welfare program essentially a job or paycheck entitlement program. Extensions to UI encourage recipients to stop looking for work. You are undoubtedly not in that category but many others are gaming the system. We cannot afford a costly new entitlement program. Government cannot provide a paycheck entitlement.
Your story may be nice but it still represents theft from the producers and transfers it to non-producers.
Explain to me how it is that in any other time, the standard benefit for unemployment insurance is 26 weeks? Why should that be extended to 52, 99, 126 weeks for anyone? Will future recipients be entitled to 126 weeks?
I am tired of having a gun jammed in my ribs and the product of my labors stolen from me to serve some noble purpose like providing you and others like you with food, fuel, or whatever.
I have worked every day from the age of 17 and NEVER, EVER, collected unemployment in 30+ years of working. Went to college at night and worked two to three crappy jobs simultaneously to make ends meet in some pretty unattractive places that you would never think of going doing work that you would never think of doing.
But to you, I’m just a big meanie and a meal ticket.
I do think people should starve. It would teach them to plan better. Yourself included.
Your business’ failure was yours, timing included. You continued to throw your savings into a failing enterprise instead of cutting your losses and using those savings to cover your living expenses. You gambled your savings and lost, and you expect the taxpayers to prop you up.
Yeah, I’m green with envy alright. /sarc.
As for my just deserts, I have them every day because I earned them myself, not from some venture capitalist.
“Explain to me how it is that in any other time, the standard benefit for unemployment insurance is 26 weeks? Why should that be extended to 52, 99, 126 weeks for anyone?”
That should be easy to figure out. During high unemployment times and recessions the time to find the next job gets a lot longer on average. Your attitude stinks btw. Might as well say you inherited all and screw you. In this current depression, nobody’s safe unless you’ve made it big and have very safe assets.
Asking that obvious question makes me wonder about your boasting on the other topics.
Yeah, my attitude stinks.
Again I ask, why should that be extended to 52, 99, 126 weeks for anyone?
I inherited nothing. Through my own initiative, hard work and perseverance I have acquired a comfortable life that is as secure as I can make it.
I have been in literal poverty, sleeping in my car and doing dangerous work that most people would never consider doing. Working nights, weekends, going to school simultaneously, with ZERO days off for months at a time doing it for years. Not boasting, simple fact.
At this point U.I has become a wealth transfer, and not insurance.
Hang in there. Start a business selling something that is needed in this economy. Don’t let the nasty people get you down and just keep plugging along, no matter how long it takes. The nasty people have no idea what it is like to have lost everything and the humiliation one feels at having to hold out one’s hand for help. To hear them tell it, we are all lazy people, partying and playing on all that money that wouldn’t even make my house payment. They are fools.
I will say this much, that people here do need to know, we received much better health care when we were “poor” than when we had insurance... all for free. Being uninsured, if at 200% of poverty level or below, is a pretty darned good deal (For a family of 4, that is $44,100/yr after deductions on your federal income tax.) Even more amazing, it was the more competent health professionals that did this (something in low supply in Eastern TN.)
It boggles my mind that people are screaming about not having health insurance. Google is their friend. Or call their local health department that will give them a long list of docs, dentists, and the like that will treat the poor for free. Having to sit in the ER to receive healthcare is a myth that those of us who have always been paying worker bees have believed. We were shafted on Obamacare even more than I realized and I now understand why those left uninsured weren’t a big deal to the Obamanutters.
26 seems about right in a normal economy. In this one, I honestly have to say 99 weeks cause the market’s that bad everywhere.
I bet you wouldn’t be able to have pulled out of that poverty during this depression like whenever you did in the past. I’m sure there’s other stuff in the fed budget that is truly a waste that costs you a crapload more. Like Republican passed medicare prescription plan perhaps.
Seems like you’re doing well for yourself. Throw the people that have been working and got crushed by the banks and goldmans and other wallstreet scumbags that killed off the economy. We sure threw them a done 20x bigger in the past year.
I keep seeing people make this same idiotic claim, or similar versions thereof... and quite frankly, it's bullshit. With all due respect to fellow freepers, being dependent upon less than half of what you 'were' making before being laid off is no damned disincentive to find another job. There are no jobs because nobody's hiring. Nobody's hiring because we have g-damned commies running/ruining the country, and quite deliberately so.
So all you people that keep bleating this same tune better wake up and smell the reality. If you're lucky enough to be one of the few that still do have a job, be aware. It could be you that's laid off next and you could be the one sitting there, desperate and in despair, through no fault of your own, wondering where you'll be living two months from now...cause it sure as hell won't (or can't) be the same place you've lived for the past 12 years...cause you don't have the money for the rent.
And for all you "compassionate conservatives" (now I know where the lefties get that term)....that are either retired comfortably on pensions or 401ks...or even those that are on social security and don't have to worry about where that next check is coming or when....think again. The more people out of work, the LESS money is going to pay for your social security. This thing is going to get even uglier before it gets better. Even you on nice fat 401k retirement funds better worry. You're the last vestige of ""wealth"" the commie aholes have now. And they're coming for you next.
So yeah... keep making those noises about fiscal responsiblity and concern over the debt and all the other things that sound right for our side and under normal conditions ARE right. But these aren't normal conditions. Not even close. People are losing their jobs, their homes and everything they had these days, some after already selling off their personal possessions just to put food on the table.
So stop and think a minute (or at least try) the next time before you spout off about the unemployed. Think of this....there but by the grace of God go you. Don't be an Angle, obtuse or otherwise.
Unemployment benefits just allows the government to avoid trying to solve the problem, and it keeps the sheeple happy for awhile, they know if they stopped the benefits, they would storm the gates.
You’re not in the real world, John. That much is obvious.
Out of curiosity, what do you do for a living and how old are you?
the time I was working dangerously was 1978 after graduating HS to 1984 after graduating college.
U.I after the 26 weeks is no longer a safety net, but becomes nothing more than welfare issued by a different agency.
More to the point is that every dime that is taken in taxes is less that I have to either spend or save. If I were to save it, I could acquire a nest egg large enough to provide a return such that I have no need to work further, thus freeing up my position in the labor force to someone else.
Remember income taxes are a tax on the acquisition of wealth. As rates grow for the higher earners they must keep working. Which is the whole point. Keep the motivated busy trying to earn a living and the “citizen legislators” envisioned by the founders give way to the professional politician like Chuck Schumer.
The integrity of the citizen legislator is that it is hard to bribe a man who is independently wealthy. What can you give him that he does not already have or have the means to purchase if he desired it?
This is leads to extensions of U.I. by hte professional politician, shopping for votes as opposed to the principled citizen legislator do the right thing in trying preserve the liberties and property of his constituents.
Sooo...apparently, anyone that is unemployed is considered "sheeple'?
I'll ask you also. What do you do for a living and how old are you?
I AM one of the long-term unemployed myself. I lost my former 6-figure, 20-year IT career last fall and have not been able to get another job in the field at all. I very easily could have been one of unemployed you speak of who has lost everything, but I saw all this coming last year before I actually got canned and my family took steps to prepare and get the situation under control before we got buried.
We started early working to eradicate all debt - no credit cards, car payments, etc. My wife went back to work and we sold our overpriced suburban McMansion last summer into the declining market, but thanks to the flaming hoops we were willing to jump through in order to get and keep a buyer, we got it sold and came out of it with some cash in hand.
I also completely cashed-out my 401k after getting laid-off and did the only rational thing I could do with it: used all of it as a huge downpayment on a much smaller house in a less expensive town. So now I'm in my 40s with no retirement savings whatsoever, but at least we have a place to live with a mortgage that is now is smaller than the SECOND mortgage on our previous house.
I've also gone back to school at an inexpensive community college to retrain to do something else, worked my butt off to ace my classes and put the young kids to shame, and am now very close to landing a job. Yes, if get lucky I'll be making A FIFTH of what I used to make before my layoff, but we've endured the sacrifices and altered our lifestyles to where we'll still be secure.
So yeah, I can legitimately claim that unemployment IS a disincentive to find work. I was getting more from my UI benefit than I'll be making when I go back to work - what would you do in this situation?
The only people who are making a big deal out of this is the news media.
None of your damn business.
My point was that the government is not motivated to do anything about the economy as long as they can simply keep transferring money from the producers, instead actually trying to address the underlying structural problems of the economy.
Bring back jobs if you want a recovery. Unemployment won’t do squat for the economy. I know first hand how it works. My husband was off for 6 months and it paid a lot less then what he could make working. So all we paid were essentials which leaves nothing to spend on anything else. And that does absolutely nothing for the local economy.
That’s nice that you were able to manage the situation. Of course, you had the benefit of a spouse’s income, plus you had a savings plan. People that are unmarried don’t have that option or other salary to fall back on. It’s also less likely that they have enough savings to live on. But that’s not even the point here.
The point is...you claim that receiving unemployment benefits disincentivizes people (meaning ‘other’s...not you) to look for and find work. You also fail to understand the plight of those ‘others’ when they may not have another spouse’s income to rely on, while you make only 1/5 of what you’re used to making.
Here’s a clue....IF you could get hired for a job making 1/5 of your former salary, it wouldn’t be enough to live on. The chances of even getting that job are slim to none, since the employment application usually asks how much you made at your last position and if you are honest, they won’t hire you. They’ll figure you’ll bolt as soon as you find something better (rightly so). If you lie and say you made less, and they check, you won’t get the job.
Now...unless you made $100,000 a year, 1/5 is not going to be enough to live on. I only made $50,000 a year. 1/5 of that would barely just pay my rent. Even at $70,000 a year, 1/5 of that would only be about $1,200/month. Great if you have another income to fall back on, or if you’re living with mommy, but not so great if you’re on your own. Get the picture?
I’ll say it again. In normal times, these claims would be valid. These are, as you already know, not normal times. The fact that you’d even have to consider taking a job making 1/5 of your normal salary attests to that fact. Between the number of applicants per job, the overqualification and previous salary factor and the age discrimination factor for those of us over 50, it’s a bleeding nightmare out there. And it’s getting worse, not better.
All I’m saying is....stop and think about others that are not so fortunate as you are before you make blanket statements that, even if you didn’t intend to, condemn those of us that are still unemployed through no fault of our own.
Be a compassionate conservative...not just the faux cliche that the left throws out there and uses against us due to our fiscal conservative policies.
My point was that the government is not motivated to do anything about the economy as long as they can simply keep transferring money from the producers, instead actually trying to address the underlying structural problems of the economy."
Your point is valid.... except that... these are not normal circumstances. You and I both know the government is "disincentivized" (there's that word again) to do anything about the economy as long as it can grab power from the current disaster we're in.
But my post was addressing those that claim the unemployed don't have an incentive to find work as long as they are receiving unemployment benefits...which is just not true.
Retired, over 65 and on social security, eh?
Oh please get some perspective, this country has been through this many times, ever heard of the Great Depression? It was in all the papers.
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