Patterico's Pontifications

4/19/2011

Are Unemployment Benefits Hurting The Jobless?

Filed under: General — Stranahan @ 5:52 pm

[Guest post by Lee Stranahan]

Another day, another illusion-sustaining scary headline at The Huffington Post.

HUff_OutOfLuck

I say illusion sustaining because the goal of the article is not actually to help people who are unemployed. If that were the goal, an entrepreneur like Arianna Huffington might have any number of useful things to say to the people facing the prospect of no income. In fact, to be fair, I think the Huffington Post actually does have a number of articles that are useful to would be entrepreneurs, usually found on the Business or Life sections.

But the Politics section is the big eye-magnet for the Huffington Post so it gets front-page headlines. The real point of this article is to reaffirm to the mostly liberal readers of the Huffington post that the Democratic talking point of extending unemployment benefits is the only salvation for the unemployed.

As I’ve argued before, long-term unemployment benefits aren’t any sort of panacea because our long-term employment scenario has changed due to the digital revolution of the last decade. In short, many of the jobs that have gone away are not coming back, ever. Those jobs are remnants of a bygone era and the sooner policymakers get real about that point, the sooner they can start dealing with some solutions that might actually work.

Let’s put this in some practical terms and take a look at the first few paragraphs of the Huffington Post article…

Robin St. Louis of Charlotte, N.C. lost her job as a sales rep just before Christmas in 2009 and said she hasn’t had much luck with her job search since then.

"Looking for a job, it seems your résumé goes into a black hole," St. Louis, 46, told HuffPost, describing the process of flinging one job application after another at unresponsive potential employers and staffing agencies.

St. Louis said her family is grateful for the $325 she’s received every week in unemployment insurance since her layoff: "This money’s sustaining us.

The amount of money that will be lost to this woman and many like her is $325 per week. That translates into roughly $60 a day, five days a week.

My thought on this is that it can’t be that difficult to teach someone how to earn $60 a day. Starting a simple service or home-based business should be able to net somebody putting in the effort $60 a day and possibly much more.

How much better the entire economy would this be? Even the proponents of unemployment benefits know that it’s not the same as productivity; it’s taking money from someone’s pocket and putting it into someone else’s. Yes, it’s the redistribution of wealth – but let me point out that I think there are plenty of cases where the redistribution of wealth is needed, such as providing some sort of basic safety social net. But my view is also that this sort of redistribution is far from ideal and that 99+ weeks of benefits are way beyond the bounds of a reasonable social safety net.

Is there any role for government here? I’d argue that an efficiently run government program that put people to work doing something productive would be a greatly superior alternative to extending unemployment benefits out into infinity. For instance, there is no shortage of trash to be picked up or vacant lots to be turned into community gardens.

I’d love to see some actual research into how many people who are collecting unemployment benefits actually want to work. Whenever I bring this topic up, I’m always met with the answer that most people really and truly want to work. I just don’t believe it. Sorry, my personal experience tells me that there are people out there who are quite happy collecting unemployment and going through the motions of filling out job applications willy-nilly or whatever other hoop they need to jump through to collect a check. This is all anecdotal of course which is why I said I would love to see some real numbers.

In the meantime, is it too much to ask for some political middle ground between the people on the left who think that these benefits should keep going on and on forever and the people on the right who simply want to cut them off cold. Can we put some thought into creating some programs that spur productivity and give people willing to work a chance at a different future?

- Lee Stranahan

46 Comments

  1. he dooes not look happy at all nope not one little bit

    Comment by happyfeet (760ba3) — 4/19/2011 @ 6:01 pm

  2. *does* I mean

    Comment by happyfeet (760ba3) — 4/19/2011 @ 6:01 pm

  3. The vast majority of my gross revenue comes from very wealthy people.
    That wealth/revenue gets turned into jobs, purchases. Money hits the streets.
    People practice a craft, dig ditches.

    Taxes are withheld, Social security is withheld and then matched by me.
    Sales taxes paid, on and on…

    If the government “soaks the rich” my business is done.

    (by the way, I did some minor work on the estate the Huffingtons owned here in Montecito)

    Comment by SteveG (cc5dc9) — 4/19/2011 @ 6:03 pm

  4. . Starting a simple service or home-based business should be able to net somebody putting in the effort $60 a day and possibly much more.

    Most businesses fail. To succeed in business, you need to find customers. In effect, you are applying for a job every day.

    Sorry, my personal experience tells me that there are people out there who are quite happy collecting unemployment and going through the motions of filling out job applications willy-nilly or whatever other hoop they need to jump through to collect a check.

    Filling out job applications is 80% of looking for a job.

    Comment by Michael Ejercito (64388b) — 4/19/2011 @ 6:19 pm

  5. This is a very productive and smart direction to take, Lee. I agree, we can inspire and lead eachother in a better direction than just spitting out ‘out of luck, 99 weekers!’

    Michael’s right that showing up is 80% of anything.

    Comment by Dustin (c16eca) — 4/19/2011 @ 6:21 pm

  6. that look on that feller’s face is entitlement I decided

    Comment by happyfeet (760ba3) — 4/19/2011 @ 6:24 pm

  7. Even Paul Krugman states that extending unemployment benefits works as a strong disensentive to finding work. That is paul krugman from his itroduction to economics textbook (not paul krugman the NYT pundit)

    Comment by joe (93323e) — 4/19/2011 @ 6:27 pm

  8. Hmmm . . . I wonder if someone that works an eight-hour day at minimum wage earns $60.

    Somebody needs to do the math on that one.

    Comment by Icy Texan (cb089c) — 4/19/2011 @ 6:29 pm

  9. Michael,

    I don’t agree — filling out applications like everyone else is a bad strategy. It’s no strategy at all, actually.

    Comment by Lee Stranahan (708cc3) — 4/19/2011 @ 6:39 pm

  10. well you can’t make any money on eBay, what with all the fees

    Comment by happyfeet (760ba3) — 4/19/2011 @ 6:40 pm

  11. I don’t agree — filling out applications like everyone else is a bad strategy. It’s no strategy at all, actually.

    Any better ideas?

    Comment by Michael Ejercito (64388b) — 4/19/2011 @ 6:42 pm

  12. ” Guest posy by Lee Strongman???”

    Comment by Gazzer (339c2e) — 4/19/2011 @ 6:56 pm

  13. I may be stating the obvious, but the unprecedented 99-week unemployment benefit period was never intended to solve the problems of the unemployed. It was intended to solve the problems of the Obama Administration, and locked in 10% (now 8.8%) of the vote for (D).

    Comment by TimesDisliker (bcc6d1) — 4/19/2011 @ 6:56 pm

  14. There are over 10 million illegal aliens in America doing the work that some Americans are unwilling, but are perfectly capable of doing.

    When I was younger, was less knowledgeable, was less skillful, I and others I know did those jobs. Now, when the occasion calls for it, I still do what is necessary to help my family, before I choose to sustain myself through involuntary exploitation.

    Rejecting the selective rule of law would immediately open positions for Americans in the agricultural, industrial, and service sectors. Not only would it cut unemployment in half, but it would reduce the progressive burden carried by our social services, including our public schools.

    Once Americans are weaned from their non-contributory entitlement payments, then they will begin to ask questions of why they and their children are being displaced by a protected foreign class in clear violation of the law.

    Isn’t the selective rule of law some kind of civil rights violation?

    Anyway, that’s where we should start. Next we need to equalize free trade with nations that do not meet our environmental, regulatory, and human standards. Until there is an equalized premise for competition (one way or another), Americans simply cannot hope to preserve their standard of living.

    The distribution of funds acquired through involuntary exploitation, the application of a selective rule of law, both promote progressive corruption of individuals and systems. We should be concerned first and foremost with correcting this inequitable condition. It subverts the democratic process and it is an affront to individual dignity.

    Comment by n.n (e7f97a) — 4/19/2011 @ 7:04 pm

  15. One immediate problem with Lee’s recommendation is that it would never pay for your health care. If, instead of looking for wage work, you follow Lee’s advice and strike out on your own, even if you make quadruple what you would on unemployment, something as simple as a hernia or, even, a complex bone fracture, would bankrupt you. If you have children, it’s an even more formidable risk.
    This yet another reason privatized health care is such a drag on the economy. Insurance companies know they can jack up their rates for individuals, who have little or no negotiating power, and are, essentially forced to subsidize the lower rates negotiated with big employers.
    Not that I blame insurers alone. They are merely passing on costs imposed onto them by big hospital conglomerates, which have most of the bargaining power within the healthcare complex.
    The lack of affordable healthcare prohibits most reasonable people from starting their own business. For most people, finding a job that provides health insurance is the only responsible course.

    Comment by Big Median (2f532a) — 4/19/2011 @ 7:04 pm

  16. Comment by Icy Texan — 4/19/2011 @ 6:29 pm

    $60 is 8-hr @ $7.50/hr.

    Fed min wage is now at $7.25/hr re Wiki.

    Comment by AD-RtR/OS! (4b2ffd) — 4/19/2011 @ 7:07 pm

  17. In certain locales union rules make it nearly impossible for the jobless to do even minor manual labor such as picking up garbage or painting, or hauling. In many of these same areas draconian “health” regulations make it impossible for creative cooks to set up food stands, or make delicious homemade pies, cookies, dips and jellies to sell at farmers’ markets. A friend who lost her job and was having financial problems took in a paying boarder to help cover her mortgage payment and ran afoul of a zoning rule.

    In a logical and sane world all of the above scenarios and many others should be available as alternatives for people struggling with unemployment. This ain’t the 1930′s ’40′s or 50′s, though and fighting government idiocy and the unions makes self-reliance much harder than it should be when real jobs are scarce.

    Comment by elissa (4cc08f) — 4/19/2011 @ 7:10 pm

  18. filling out applications like everyone else is a bad strategy

    I’ve heard before that almost all jobs come from networking rather than applying for open positions, but I guess my experience has been to just apply for a lot of positions and eventually get an interview.

    It is a strategy for some people. I think Lee’s objection is that this isn’t a strategy for the government. Just saying ‘hey, apply for jobs and we’ll give you cash’ doesn’t appear to be working.

    Anyway, Lee is pointing to a fundamental problem. Where are we going to find the jobs needing done to justify the labor? We could build 1000 more nuclear reactors. We could renew manifest destiny, and takeover Mexico. Whatever we do, it has to be big enough to use millions of workers.

    Comment by Dustin (c16eca) — 4/19/2011 @ 7:10 pm

  19. “One immediate problem with Lee’s recommendation is that it would never pay for your health care.”

    When I was in my 20s, my health care needs were practically nothing. Less than $1000 for the whole decade. A lot of the jobless don’t need health care.

    “Not that I blame insurers alone. ”

    LOL

    Comment by Dustin (c16eca) — 4/19/2011 @ 7:12 pm

  20. Expect unemployment to fall in those states as soon as it expires. It is well known that a disproportionate number of unemployed find work in the last few weeks of eligibility.

    Comment by Mike K (8f3f19) — 4/19/2011 @ 7:13 pm

  21. “… it would never pay for your health care…”

    It depends on what cohort you’re a member of.
    Under 35′s have, generally, very low health care costs since they are – all things being equal – healthy.

    It would probably not be enough to pay for Health Care Insurance, but that is the argument we’ve been having for several years now; and why Obamacare mandates participation of all in the system so that they young and healthy – who demand few services – can financially support the elderly who overuse the system, through their insurance premiums.

    Comment by AD-RtR/OS! (4b2ffd) — 4/19/2011 @ 7:13 pm

  22. Anyway, what Lee is arguing for is some vague hope that we can get people paying for their own health care by making them much more productive. So Big Median’s complaint that this doesn’t pay for health care is seriously out of left field. These people were not paying for health care while sitting around at home, where they? How is getting them to work not a major improvement?

    Lets annex Mexico and fix her up. there’s your labor, and a solution to the immigration crisis. In 25 years, we can turn the territory into a few states, hopefully prosperous enough that the USA doesn’t revert further into socialism.

    The corrupt country to our south is miserable, and why shouldn’t we change that? The infrastructure needs of that country are tremendous. It would take every unemployed person in both countries quite a while to repair.

    Yes, this is a pretty silly idea. Feel free to suggest a better one.

    Comment by Dustin (c16eca) — 4/19/2011 @ 7:19 pm

  23. Shorter big median liar – you are racists and OBarckyCare ROCKS!!!

    Comment by JD (85b089) — 4/19/2011 @ 7:22 pm

  24. They are merely passing on costs imposed onto them by big hospital conglomerates, which have most of the bargaining power within the healthcare complex.

    Price controls can solve that, although it has suide effects.

    Anyway, Lee is pointing to a fundamental problem. Where are we going to find the jobs needing done to justify the labor? We could build 1000 more nuclear reactors. We could renew manifest destiny, and takeover Mexico. Whatever we do, it has to be big enough to use millions of workers.

    Digging a hole as deep as the Grand Canyon and then filling it back up?

    Comment by Michael Ejercito (64388b) — 4/19/2011 @ 7:26 pm

  25. That was my (sarcastic) point exactly, Drew. Many of those 99ers could be out in the workforce right now, reducing the unemployment rate AND the burden on the treasury to cough up the funds for unemployment compensation. There’s a difference between saying “I can’t find a job,” and “I can’t find a job in my chosen field,” or “I can’t find a job that I’m willing to do”.

    Comment by Icy Texan (cb089c) — 4/19/2011 @ 7:28 pm

  26. you know what there aren’t enough of is places where you can get tasty kolaches, at least here in the Valley anyway

    ok so we just need a self-starter to step up – they could start with a kolache truck! They could even call it The Kolache Truck and then everyone could have tasty kolaches and the kolache folks could get off the welfare

    Comment by happyfeet (760ba3) — 4/19/2011 @ 7:29 pm

  27. “Can we put some thought into creating programs that spur productivity and give some people willing to work a chance at a different future?”

    Lee, you are still under the impression that the federal government can create jobs in the private sector.

    Comment by retire05 (2d538e) — 4/19/2011 @ 7:32 pm

  28. Digging a hole as deep as the Grand Canyon and then filling it back up?

    LOL. Touche.

    Well, retire05 provides the objection that I think many conservatives will. Prosperity doesn’t come from the federal government, but from entrepreneurs investing.

    That’s a good point, but the status quo remains that we’re spending money on unemployment compensation. I would rather we spend that on an alternative program that is more proactive.

    We spent a huge amount of money on ‘stimulus’, bailing out Wall street, GM, etc. I wish we had spent that on something like a few hundred nuclear reactors. There are plenty of problems we need to solve, so rather than sheer shovel ready make work, I’d prefer something useful.

    Comment by Dustin (c16eca) — 4/19/2011 @ 7:38 pm

  29. ” Guest posy by Lee Strongman???”

    Hahahahahahaha.

    I fixed it.

    Not sure what was going on there but I took a screenshot before fixing it. Good times.

    Comment by Patterico (c218bd) — 4/19/2011 @ 7:40 pm

  30. Mrs. P. figured it out. Has to be autocorrect.

    Hahahahahahaha.

    Sorry, Lee.

    I mean, “Mr. Strongman.”

    Comment by Patterico (c218bd) — 4/19/2011 @ 7:43 pm

  31. Well, happy, where can you get good kolaches outside the Hill Country and Brazos Valley, except of course West, Texas?

    The Czech community is kinda of limited in the Southwest.

    Regardless, those great kolaches-makers did and do a fantastic job without the help of the Feds. Confederate or otherwise.

    Comment by Ag80 (6134b7) — 4/19/2011 @ 7:46 pm

  32. “middle ground between the people on the left who think that these benefits should keep going on and on forever and the people on the right who simply want to cut them off cold.”

    Lee – I’m not aware of anybody on the right suggesting unemployment benefits should not exist if that is what you are suggesting, most have the same problems you point out in your post.

    Comment by daleyrocks (bf33e9) — 4/19/2011 @ 7:47 pm

  33. Are these the people Obama called the “Funemployed?”

    Comment by Machinist (b6f7da) — 4/19/2011 @ 7:54 pm

  34. I’d love to see some actual research into how many people who are collecting unemployment benefits actually want to work.

    That’s a quite illiberal thought. Shame on you, blaming the victim and all that. Pretty soon you won’t have a single liberal cred left!

    Victimhood trumps all and must not be questioned!!!

    Comment by Chuck Roast (663ce8) — 4/19/2011 @ 7:55 pm

  35. “One immediate problem with Lee’s recommendation is that it would never pay for your health care.”

    I had to pay for my own health insurance when I was receiving unemployment insurance. The state of California didn’t pay it for me. Even if an employer doesn’t provide health insurance, it’s a lot easier to pay for it if you have a job, though Obamacare makes it harder because it makes high deductible policies illegal. Also, a job is usually better for your health.

    Comment by Tanny O'Haley (12193c) — 4/19/2011 @ 7:58 pm

  36. We’re all a bunch of nazis.

    /Neve rmind nazis were leftists

    Comment by DohBiden (15aa57) — 4/19/2011 @ 8:08 pm

  37. never mind*

    Notice how the word liberal today is different from classic liberalism.

    Comment by DohBiden (15aa57) — 4/19/2011 @ 8:11 pm

  38. We spent a huge amount of money on ‘stimulus’, bailing out Wall street, GM, etc. I wish we had spent that on something like a few hundred nuclear reactors. There are plenty of problems we need to solve, so rather than sheer shovel ready make work, I’d prefer something useful.

    Digging a hole as deep as the Grand Canyon and filling it back up would have been less of a waste of money than bailing out Wall Street.

    Comment by Michael Ejercito (64388b) — 4/19/2011 @ 8:18 pm

  39. Michael, I agree. We should have let failures fail. If we wanted some kind of stimulus, it should have been more proactive than propping up failures. It’s painful to clean up the mess, but part of the problem is that these corrupt failures knew they were well enough connected that they didn’t have to manage themselves responsibly.

    That’s basically the entire theme of this country lately.

    Comment by Dustin (c16eca) — 4/19/2011 @ 8:26 pm

  40. Ironically, the most persuasive article I’ve seen, as far as showing that the unemployed are often made worse off because unemployment insurance led them to a slothful existence, was in the reliably left-wing magazine Mother Jones. See “End of the Line” at http://motherjones.com/politics/2009/09/end-factory-line

    For example:

    “You feel sorry for that autoworker until you hear he draws nearly three-quarters of his old salary for the first year of his layoff and half his salary for the second year of his layoff—plus benefits.

    “It don’t make sense to work,” says the autoworker, buying one for the stranger.

    If he finds a job, he says, they’ll take his big check away.

    “There ain’t no job around here for $21 an hour,” the autoworker says. “I might as well drink.”

    Comment by DWPittelli (2ca9c8) — 4/19/2011 @ 8:44 pm

  41. If he finds a job, he says, they’ll take his big check away.

    From my experience getting unemployment benefits, the check is not taken away entirely; rather, half of wages earned in an unemployment claim period is deducted from the unemployment check.

    Comment by Michael Ejercito (64388b) — 4/19/2011 @ 8:51 pm

  42. Waaaaaaaaaaaacist far-rightes your fascists too

    /Leftard

    Comment by DohBiden (15aa57) — 4/19/2011 @ 10:18 pm

  43. Can we put some thought into creating programs that spur productivity and give some people willing to work a chance at a different future?

    CCC. Still many nice park features around from then.

    Comment by Aaron (b4ec19) — 4/19/2011 @ 10:35 pm

  44. They’re waiting for those Blockbuster stores to reopen. I interviewed 2 people about a month ago who had both been out of work for 2+ years. In the interview 1 guy started talking about doing support in 1998 “when the internet was new”. I controlled my urge to mention that a lot had changed since then. Sorry if you’re out of work for 2 years – you’re no longer part of the workforce and you shouldn’t be collecting unemployment you should be looking to register for other means tested benefits.

    Comment by bandit (2de15d) — 4/20/2011 @ 7:12 am

  45. A serious look at this situation should examine the impediments to entrepreneurship that local, state and federal governments have put in place. Perhaps a suspension of some of the costly fees and taxes for new businesses for the first 2-3 years of their existence would be a place to start. Or indexed to net income to ease the burden of a start-up.

    If you are a long-term unemployed person realizing you are now on your own and must start a business, chances are you are low on funds and are ineligible for any meaningful credit from banks (who took bailout money and are using it to amass enormous profits in foreign exchange market).

    In CA to start a typical business you need to create a legal entity($), file for business license in your community($), register with the state and face a $800 minimum tax regardless of your entity’s actual net income or loss, pay employment taxes (both employer and employee amounts), etc., etc.

    Some areas of business have been affected by the Obama administration’s attack on the “financial services industry” and polluters like: if you buy and rehab a house for a profit you must now pay a 3% federal tax on the profits, if you are rehabbing a property built before 1978 then you are required by the EPA to hire only EPA certified contractors(few around and naturally charge more for the same work done previously by laborers) and use specific EPA imposed work procedures and hazardous waste disposal procedures ($$$)or face a $31,000 per day fine. Then you have the permits and inspections etc. that seem more focused on revenue generation than safety. HUD goes back and forth on a rule that prohibits buying, fixing up and selling a house within a 90 day period. When it is in place you get to sit on a completed property waiting for the “time-out” to end. So you succeed and want to sell the property within a year of when you bought it, you get to pay short-term capital gains tax on top of the 3% profit tax.

    This goes on and on. The costs keep going up and the rules de jour keep changing. I guess I can start an eBay business selling my chotchkies…

    Comment by in_awe (44fed5) — 4/20/2011 @ 9:51 am

  46. I think this is where discussions about the economics of minimum wage enter the equation. Are there jobs for which a business owner may reasonably consider hiring a worker for less than 7.25 an hour for? Yes, but that would be illegal. All you’ve done is ensure that people whose skillset is deemed to be worthy of less than 7.25 an hour are now unemployed.

    Comment by jaxon (2b8abd) — 4/20/2011 @ 10:32 pm

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