Unemployment benefits

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Fellow Americans, you can thank 'Right America' & the 'Republicans', for the abject mess you find yourselves trapped in. Unbridled capitalism, unfettered laissez faire, mindless deregulation & the unashamed pursuit of greed & self-aggrandisement, have brought your nation to its shattered knees.

The only ones benefitting from this national calamity are the wealthy few, who don't give a rat's tail for the plight of the hapless, suffering & betrayed millions of fellow Americans.

And yet you blindly & morronicly support the selfish, self-absorbed agendas of the capitalistic predators & pschopaths, like gospel truth!!

Lord have mercy!



It is hysterical rants like yours that add nothing to a debate and increase the noise portion of the signal-to-noise ratio in comments.

@ all other logical, thinking readers

Extension of unemployment benefits IS an unwelcome increase in the nations debt load, but when you balance out the financial needs of the unemployed, the fact that insufficient jobs are being created, and the fact that the money used for unemployment benefits is likely to be plowed right back into the economy, I believe that it is an expenditure that is at least justified under the circumstances.

That said, the critics of adding to our debt are right on point. However, I believe that in lieu of all of this wasted "stimulus" that was spent on Wall Street, and all the increased costs associated with the health care "reform", we would have been better off spending that money on unemployment benefits in the first place. Sadly, that money was already spent and wasted, and the unemployed are still unemployed, so now we are stuck with a justified expenditure that will drive us deeper into debt.



Pretexts, not reasons. The Republicans will do nothing to help the unemployed because it is in their political interest that the economy stay bad for as long as possible. They have become a faction in the worst sense of the Founding Fathers, self-interested and without regard for the common good. I am amazed and disgusted that a party I used to admire has sunk so low.


When the Economist refers to an academic paper, could they please put a hyperlink to it somewhere on the online site? Some of us like to chase stories a little further - especially if we are professionals in the particular story's subject.

Now I'll have to go digging through the San Francisco Fed site ...


The problem is structural: unemployment remains largely a residue of the manufacturing age and its most competitive industries have moved out of the US for competitive reasons. What remains is largely an aging work force cozzened by restrictive practices and with little ability to adapt to the dispassionate dictates of newer and more efficient industries that can make comparable or better products cheaper. Lower labor costs are no longer the drivers they were in the late 1900's because processes are automated more effectively. It's what you get and pay for progress.

So the promises to restore the U.S. to a former supremacy are inherently improbable, particularly as the competitors which displaced them in the first place are now being displaced in turn. No combination of optimism and hypocrisy can do much more than buy time on the ground for programs aimed at keeping the unemployed at least minimally relevant economically.

To berate politicians for inability to deliver on nice-sounding promises just shows how little things have changed and politicians have learned since the days of Good Old King Canute. A bit of realistic honesty and imaginative social engineering is the unavoidable starting point for doing something about an otherwise intractable problem. A palliative protectionism is certainly not the place to start looking.


@Lex-Humana: Well said, my friend. I was just about to chide into Nirvana-bound's socialist rants and you beat me to the punch so thank you.

You cannot keep throwing money at a problem and expect it to go away, this is what congress does by extending unemployment checks beyond 2 years, which is what they just did. Republicans are the only ones to stand up and say, extend the benefits but cut something to do it, not add to the deficit.

The only jobs out there are low paying and some people make more money collecting unemployment so this further complicates the situation. We have needed job growth, pure and simple. This president has created an environment that makes companies afraid to hire and expand. He has spent his entire presidency along with congress creating entitlements and expanding the role of government, all the while people are still jobless. As we like to say here in the states to the president:

"it's the economy, stupid"


I only have two close friends that are currently unemployed. Both have turned down job offers because the pay was only slightly above the amount of their unemployment check.

Anonymous in America

Except for the last paragraph, the article is a FAIL because it is premised on straw man arguments and contains shoddy analysis.

According to the article, "[t]here are two main reasons why Republicans oppose extending benefits: because the country cannot afford it, and because benefits, they believe, have given the unemployed an incentive to stay out of work."

Republicans do not oppose the extension of unemployment benefits; rather, the GOP, led by Senator Bunning, simply asks for the use of unspent economic stimulus funds or cuts elsewhere in the federal budget to offset the extension of unemployment benefits so that, under Pay-Go, the extension is deficit-neutral. The so-called GOP claim that extended unemployment benefits give the unemployed an incentive to stay out of work is a straw man argument because long-term unemployment is caused in large part by fiscal and regulatory policies that discourage the creation of jobs. The unemployed do not choose to stay unemployed in order to receive benefits; rather, workers remain unemployed because, as the article points out, there are simply too few jobs available.

President Obama relies on the multiplier effect as an economic argument in favor of the extension of unemployment benefits. The flaw in his argument is that the government receives nothing in return for benefits payments. Under an unemployment benefits program, the government is simply buying the loss of worker productivity, which is an economic waste. Like unemployment benefits programs, government procurement and hiring programs have multiplier effects; however, procurement and hiring programs are economically superior because the government receives something of value, for example, a building, equipment or worker output, in return.

According to the article, "[i]f unemployment benefits keep [the long-term unemployed who apply for SSDI] in the labour force, the savings could be substantial." This sentence fails the laugh test because there are no savings to be had if workers remain unemployed and continue to receive benefits. Whether under SSDI or an unemployment benefits program, the government is buying the loss of worker productivity, which is an economic waste.

In sum, the economic arguments, none of which are valid, for unemployment benefits programs should not be confused with the moral arguments, nearly 15 million of which are valid. Yet read the shirt. Despite the passage of bills to extend unemployment benefits, President Obama continues to lose public support in large part because he has crafted economic policies that do not encourage the creation of jobs. Indeed, the correspondent strongly suggests, perhaps inadvertently, the superiority of Reaganomics over Obamanomics: "In the year that followed the end of the 1981-82 recession, when the unemployment rate last exceeded 10%, 3.6m jobs were added. In June of this year, by contrast, employment remained below the level at the estimated end of the recession, one year before."


Snoopy6M wrote: "Though small right now, a left-leaning bias seems to be brewing within the Economist."
Small right now? With respect to The Economist's reporting on the Unted States it is not small at all....it's huge. The UK & Europe reporting is still somewhat objective...but the the U.S. offices are very bias to the left.

Fossil American

"....There are two main reasons why Republicans oppose extending benefits: because the country cannot afford it, and because benefits, they believe, have given the unemployed an incentive to stay out of work. Neither reason is well founded....."

The author is plain wrong here. The Republicans oppose to the congress breaking the pay-go rule: which dictates that increase in spending in one area has to be offset by decreases elsewhere. It is the breaking of the rule that the Republicans object to, and not the extension of benefit itself.

The Republicans has a bill out there to extend the unemployment assistance funded out of not-yet-spend "stimulus money" already allocated. Of the $700bn, only about 1/2 is wasted thus far. Plenty of money left in that pot for this purpose rather than increase spending yet once again.

WT Economist

If the incentive effect is a concern, and long term idleness is a concern, extended unemployment could be turned into a jobs program, such as the WPA and CCC in the 1930s. With so many high level people out of work, the unemployed could probably organize the projects themselves.


Republicans did not oppose unemployment benefits outright. They opposed the method in which they were funded; rather than further add to the deficit, they sensibly asked they be funded from cuts in other federal programs. If $34 billion is so small, as the Economist asserts, why could this money be found somewhere in the federal budget? It is laughable to claim that government spending is so efficient that this money simply could not be had besides through borrowing.
Though small right now, a left-leaning bias seems to be brewing within the Economist. If it were true, it truly would be a sad state of affairs.


I agree with derr.'s comment that your article is lazy in providing a balance view to the impact and effect of long-term unemployment benefits. I find that this magazine has done this a lot more over the past several years. I am beginning to think that certain editors acutally have a specific political bias something the old Economist never did. There are truly two different views to the benefits of extended benefits. Keep in mind many individuals in the US with this new extension will cross over 100 months. See the 1990 National Bureau of Economic Research study "The results indicate that a one week increase in potential benefit duration increases the avg. duration of the unemployment spells of UI recipients by 0.16 to .20 weeks or 2006 NBER study by Raj Chetty of UC Berkely "It is well known that unemployment benefits raise unemployment durations". It would be great if your article had discussed studies from both sides with citations.


You should have made it more clear that that .4% is .4% OF the 10% (.0004+.0996=.1 rather than .004+.096=.1)

That means that only 1-in-250 unemployed people are staying unemployed because of benefits (rather than 1-in-25)

derridaderider, a link was posted on Marginal Revolution recently. I'm afraid that's all the help I can give you. I'd recommend reading it, as it was quite interesting.


WPA or CCC was a good idea, but with the machinery age all of the jobs require specialized skills. Building roads is a complicated business and not left to the unskilled. There are only so many flag jobs. Even maintaining the national forests requires roughing-it skills, which highly uncommon among the unemployed and moreover they are not physically capable of doing hard labor.

People ask the same thing about the peace corps, but what the peace corps needs is degreed civil/enviromental engineers. Well the entire US and most of the rest of the world has a shortage of those. We have plenty of lawyers though.


US spends too much on military targets. That's where the prolem lies.

In my opinion,US should invest more to help underdeveloped countries,in order to sell more american products in those countries when they become richer.This is sure to creat huge number of jobs.

Overseas military operations are stupid,that only cost the money of taxpayers,US will get nothing.


While a large part of the unemployed constituency is naturally frictional from our transition away from manufacturing, America has become a country of ideas and innovation.

With that, the need of an educated workforce is absolutely crucial. The necessity of stabilizing America's financial institutions and the lackluster reforms have unfortunately detracted a lot of much needed subsidies away from higher education. Tuitions increase, and scholarship trusts dry up which leave many lower-middle and middle class students unable to even afford the right to make a decent living.

Educating, consider it more of retraining, America's existing workforce would prove to be an investment with much more considerable returns, especially in the long run.

The continuation of unemployment benefits is essential, America has the capacity of production (supply), what it lacks is the demand. Unemployment benefits provide the needing families the purchasing power which stimulates the demand side. Conversely, Reaganomics and tax breaks simply allow the upper classes and larger companies to save more and boost their reserves in uncertain times.

Hell, even health care reform would be a simple fix by just increasing the supply of doctors. Medical doctors, healthcare professionals in general, are about the only professional jobs America has to import from countries like India and the Philippines. Class sizes have increased a little, but it takes years on account of training before entry into the job market.


Without work there are no jobs. There is no work if you can not sell things you make at a price lower than imports. Unemployment benefit is no solution. May be you can think of opening work centers where workers will get full wages but difference in affordable wages and minimum hourly wages is borne by state. This will reduce burden on wlfare. Simply put subsidize as all emerging nations are doing


It is simply false that unvoluntary (involutary? better: wait) unemployment is only caused by minimum wages. While teenage unemployment has reached record levels, it is (a) not trivial to link this fact to the recent minimum wage increases of 41% over the last four years (the most recent one having occured in July 2009); or (b) to claim that the adult unemployment rate is so high because of minimum wages. Now if "MRothbard" wants to claim that the vast majority of currently unemployed workers is doing so voluntarily, then maybe we should rename the "Great Recession" the "Great Vacation." Reference to SF Fed article is http://www.frbsf.org/publications/economics/letter/2010/el2010-12.html
Hope this helps (single hit in google, by the way, for san francisco fed unemployment benefits)



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