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Saturday, April 30, 2011

"Millions Set to Lose Unemployment Benefits"

The WSJ's number of the week: "5.5 million: Americans unemployed and not receiving benefits":

Number of the Week: Millions Set to Lose Unemployment Benefits, by Mark Whitehouse, WSJ: ...The country’s unemployment rolls are shrinking... As of mid-March, about 8.5 million people were receiving some kind of unemployment payments, down from 11.5 million a year earlier...
To some extent, the shrinkage reflects a desirable reality: Some people are leaving the unemployment rolls because they’re finding jobs. The number of employed in March was up nearly 1 million from a year earlier...
Many Americans, though, are simply running out of time. As of March, about 14 million people were unemployed... At the time..., about 8.5 million were receiving some kind of unemployment payments... That leaves about 5.5 million people unemployed without benefits, up 1.4 million from a year earlier. ...
For the more than 4 million Americans still receiving extended benefits, the picture isn’t encouraging. ... They’ve typically been unemployed for at least 26 weeks, and may have been out of work for as long as 99 weeks, which for many people is the limit.
In the coming months, hundreds of thousands more will drop off the unemployment rolls. ... And unless Congress does something unexpected, more people with shorter bouts of unemployment will start joining them as the government phases out extended benefits next year.

And the effects of prolonged unemployment don't go away when things improve. Many of the people who "drop off the unemployment rolls" will be lost forever.

Helping people who, through no fault of their own, are unemployed and struggling to find employment when there are less jobs than there are people searching is not only the decent thing to do, it would also help the economy. If a big bank were to threaten the economy, we'd find the money to bail it out, and we could find the money to provide more help here if we had the will to do so. Instead, decent people with families to support, bills to pay, and so on are labeled as lazy leeches living off the system:

we’ve got a system where you can stay on unemployment for an awfully long time. And I think we need to create a system of decreasing benefits over time to encourage you to get a job. I think anybody who’s had an alcoholic in their life or somebody with a drug problem, realizes that until things get bad enough there’s no incentive to change. I think that we’re so generous in some of our social problems that people are unwilling to get a job outside in the heat.

This is the Say's law of jobs coupled with morality -- the supply of workers somehow creates a demand for them, it's the benefits that stop people from taking them -- and it's just as false here as it is more generally. There are not enough jobs, and ending unemployment benefits won't change that. We can always find someone who abuses any system, that's true in both the public and private sectors. But the vast majority of people still receiving help are struggling against a system they have no control over. They are trying to overcome problems they didn't create, and they deserve more help from the rest of us than they are getting. As noted here in a discussion of a poll showing that those doing well have a much more optmistic view of the economy than those who are still having trouble:

Rich people have seen more improvements than the poor in the last few years, considering factors like the rise in the stock market (which primarily benefits wealthier Americans) and the surge in commodity prices (which disproportionately hurt the poor).

And perhaps this explains some of the callousness -- I'm doing well why can't you? But I think it's more the idea that it's the "lazy others" that are having troubles, and hence don't deserve help (an echo of the deserving and underserving poor used in the past to determine who is worthy of help), a convenient belief if you are worried about being asked to help those who have not been so fortunate.

    Posted by on Saturday, April 30, 2011 at 09:18 AM in Economics, Social Insurance, Unemployment | Permalink  Comments (60)


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