Friday, December 13, 2013

Can 4M on Jobless Benefits keep 20M Unemployed?

We have always appreciated Annie Lowrey's articles at the New York Times about the unemployed --- they are some of the best on the subject. However, a few things should be pointed out regarding her last article: Jobless Fear Looming Cutoff of Benefits.

It's been cited in several studies debunking the false "cause and correlation" claims about unemployment benefits being a cause of higher unemployment; or that extending federal jobless benefits also extends the duration of joblessness.

One report from the San Francisco Federal Reserve concludes: "We estimate that extended UI increased the overall unemployment rate by only about 0.4 percentage points in the recent episode, which is small in comparison with the peak unemployment rate of 10 percent."

And from this report, which says: "The unprecedented extension of unemployment insurance (UI) benefits up to 99 weeks from 2009 through mid-2012 appears to have lengthened duration by a small to moderate amount."

A study by the Congress Joint Economic Committee found that among the long-term unemployed, those eligible for benefits spent significantly more time looking for jobs than those who didn’t qualify: "In fact, since Congress enacted federal unemployment benefits, time spent looking for a job has tripled among the long-term unemployed who are out of work as a result of job loss."

According to the Economic Policy Institute, we could lose an additional 310,000 jobs by NOT renewing federal extended unemployment benefits for 1.3 million unemployed Americans.

Casey Mulligan (who also writes for the New York Times) says that jobless benefits make workers less likely to accept lower paying jobs, which keeps unemployment elevated. But those jobs would have to be very low-paying jobs to pay LESS than unemployment benefits --- and besides, Casey Milligan has already been thoroughly debunked.

For years the GOP has claimed that unemployment benefits is a disincentive for the jobless to look for work. Over 1.3 million jobless Americans will soon lose their federal extended unemployment benefits and another 2.4 million Americans will have their State benefits expire within the next 26 weeks. So, should we expect a surge of jobs created next year?

Remember: Only one third of the "reported" unemployed in the U-3 rate receive jobless benefits; so what's keeping the other two thirds from finding work?

Does anybody remember this headline on November 6, 2009 in the New York Times 49 months ago: "U.S. Unemployment Rate Hits 10.2%, Highest in 26 Years"? That was when the Bureau of Labor Statistics was reporting 15.7 million Americans were unemployed.

The Center on Budget and Policy Priorities reported 8.7 million job losses between the start of the recession in December of 2007 and when the recession "officially" ended in June 2009. In a recent statement, Secretary of Labor Thomas E Perez said, "The November employment report continues the 45-month trend of private-sector job growth with 8.1 million new jobs created over that time."

So for the sake of argument, let's say new jobs created cancelled out all the old jobs lost, and we were back to "even". Now keep in mind, over those same last 45 months of job growth, we also had 12 million young people who graduated from high school. In a 14-page report by Rutgers, they noted a whopping 44% of high school students were unemployed.
L.A. Times: "College-educated workers are taking jobs that don't require degrees. College graduates are tending bar and driving taxis, pushing people without degrees out of those jobs."
The labor force participate rate is not historically low because of retirees. Over the past 5 years, the U.S. has had an estimated 15.4 million high school graduates and 6.8 million newly retired and disabled workers ----- meaning: Since Obama's first year in office, the U.S. has had more "non-starters" than "quitters" in the labor force.

So how can cutting jobless benefits create more jobs for those who never entered the labor force to begin with, let alone create enough jobs for those who receive unemployment benefits, let alone create enough jobs for those whose benefits have already expired, let alone create enough jobs for those who never even qualified (or applied) for jobless benefits?

Counting discouraged workers who would still like a job, we have over 20 million people out of work, but we only have 3.7 million people receiving jobless benefits.

But as always, the unemployed will always appreciate Annie Lowrey's excellent work at the New York Times.

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