The Questionable Logic of Extended Unemployment Benefits

April 18, 2010 by  
Filed under Economics

Congress has again extended unemployment benefits, this time June 2. I’ve lost count of the number of extensions that have been passed and the billions that have been spent. This won’t be the last. Our President wants to extend them through the end of the year. He really means through Election Day but he can’t say that for public consumption. Besides, what’s a few billion here and there when votes are at stake?

I find these repeated extensions somewhat hypocritical and illogical. In any given year – let’s say 2007 for example – people became unemployed and received benefits. Some of them were chronically unemployed and their benefits expired by law. ¬†Tough for them. Fast forward to 2010. Now there are more unemployed folks. Some of them are also chronically unemployed. But when their benefits are ready to expire, the benefits are extended – repeatedly.

Does this mean that the chronically unemployed in 2010 are more important than the chronically unemployed of 2007? Should we go back and even it out for everyone who ran out of benefits in earlier years?

I can determine only one reason that today’s unemployed receive treatment than those of prior years. Higher unemployment means more votes are at stake. Can you think of another reason?

Here’s an amusing but sad consequence of never-ending extensions of unemployment benefits: Payday loans. That’s right – the unemployed are using their benefit checks as collateral for payday loans! Benefit check day is now “payday.” Everyone assumes that the unemployment benefits will keep on coming, at least through the November elections. Congress is creating that expectation.

I would love to see statistics correlating the end of unemployment benefits to the time required to find a job.

Now that tax day round 1 has passed, have a look at the articles in the Carnival of Taxes to get you in the right post-tax day mood.

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6 Responses to “The Questionable Logic of Extended Unemployment Benefits”
  1. averagejoe says:

    Here, the minimum wage for most jobs, like working at a deli counter in $10. That’s a lot, for a menial job. We can’t find anyone to fill it because 40 hrs of WORK will get you $400 BUT, UI will get you $425 a week for sitting on your butt, pretending to look for work, at home.

    You think Obama is going to keep the unemployed on UI for 3 more years? What will the American ‘work force’ (I use that term loosely) look like by then? What countries would be loaning us money by then?

    I hope the whole system goes bust BEFORE the elections.

    Spare us.

  2. Tom says:

    Here is an article from the Wall Street Journal titled “Incentives Not to Work”. It reflects exactly what you are saying and even has some of those statistics you ask for:

  3. kitty says:

    I have to disagree here, and I am not a supporter of Obama. It takes people longer to find jobs in 2009 than in 2007. When there are more unemployed, when the companies aren’t hiring, it takes longer to find jobs. I am not sure about now, but it did take quite a while for some of people laid off from my employer to find a job.
    Nobody was hiring – not Microsoft, not IBM, not Google, not anybody else around NYC.

    Now, I am sure software engineers and research scientists laid off from my company could work a deli counter. But this would not exactly help keep their skills current; and keeping one’s skills current is important to find a new job. Nor does it give much time to go to interviews for a job that’ll likely result in their paying a lot more in taxes. And engineers pay more in taxes, so from pure math perspective it makes sense to pay these highly skilled people unemployement longer so that they find jobs from which they pay more in taxes sooner.

  4. MasterPo says:

    There’s a bigger problem at hand.

    By Obama’s own words, a great many of these lost jobs and positions simply are NOT coming back – ever!

    IOW, some jobs are gone for good.

    As difficult as it is to do, sooner or later people have to wake up and move on as opposed for waiting and hoping that somehow, someday, some new law or regulation will be passed and *POOF!* their old job magically reappears.

    Going to be one hell of a day of reckoning when that reality sinks in!

    Then again, for many it will never sink in.

    There was a guy here a couple of months ago claiming he always wanted to be a lawyer, had even started some school for it, but then the recession of the 80’s (yes 80’s!) started, he put his dream on hold, and has been working min wage jobs ever since hoping for a turn around in the law field (the guy is now in his 50’s). You think he’s ever going to reach his dream? I’m not taking bets.

  5. Lez and I definitely share yours (and averagejoe’s) opinion of the never ending benefits extensions.

  6. Erin says:

    I am a die hard republican and have been like you thinking how you think. However, this is NOT 2007. In 2007 jobs were everywhere. I work in the insurance industry. I have always been able to find work. I have never been off work more than 2 weeks my whole life!! Then after I was laid off Summer of last year I have looked and sent out 1500+ resumes. I have even looked for other related jobs. Then of course I don’t get hired because they feel I am over qualified!! I can name 4 people off the top of my head that were just laid off work in the last 2 weeks!! I know of several that went back to work but were laid off yet again only a few months later. This is a chronic problem right now and that is the sad truth of it!

    These are benefits that were paid IN. It is all well and easy to scoff it off as “chronically unemployed” people begging of a hand out but the fact is that there is a large percentage of people pulling unemployment that have never dons so before! I know I haven’t. I have worked my entire life from the age of 16 and up to my current age of 45. I can barely survive on what I am receiving. I have not only fulfilled the work search requirements but exceeded them regularly by double! I have gone to job fairs and everything I can think of. You can’t sit back and whine about home foreclosures and give the money to the banks yet nothing to help the people that have to find a way to make those payments.

    Texas doesn’t have 4 and 5 tiers to exhaust. We have 3 and most only get to use one of them since they are set up so strangely by dates. I am a single mom and I have a choice..unemployment or now welfare! I have never in my life drawn welfare and worked at my last job for 10 years.

    I pay in my taxes just as you do. I pay my social security in as you do though chances are very slim I will ever have access to it! I pay in medicare taxes and that will probably be gone as well. I DO NOT do pay day loans because to me it is no better than a loan shark charging 300% interest and they should be against the law!

    It is well and good to say what you are saying. But I hope you are willing to move your daughter or son and his family into your home when they are evicted or their home is foreclosed on because you think that even though the unemployment rate is steadily climbing and you see good people, hard working people and people that have always worked now unemployed as such a bothersome strain on the economy. I think I will decide that people drawing social security for their disabled children with ADHD should be considered that. I have a son with ADHD and it would never occur to me to file for money from the government to support him!! How does his ADHD cause my family not to be able to be supported? That is CRAZY!! Yet, take a look at THAT statistic!! Take a look at how many families actually get a check every single month for a child with ADHD or bipolar disorder every single month to support the family. I just wonder how that child’s illness has anything whatsoever to do with the income produced. I am a mother with 3 children with ADHD and that is the biggest bunch of BS I have ever heard!

    I hope more than anyone that I will find a job VERY soon and can atleast be able to support myself and regain some of the self respect I had. I hope to be able to look at myself in the mirror with the sense of pride I had again.

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