General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Truth Behind Today’s Long-term Unemployment Crisis and Solutions to Address It
http://www.epi.org/publication/truth-todays-long-term-unemployment-crisis/***SNIP
I am now going to talk about what we should do about this. My role here is to identify what economic analysis tells us should be done, not what is necessarily politically feasible. Given that demand is the problem, we should be:
Passing extended benefits again to help the long-term unemployed, who are the ones who have been the hardest hit by the lasting effects of the Great Recession,
Undertaking other measures that also stimulate aggregate demand, and
Enacting policies that spread total hours worked across more workers.
Taking these in turn:
Extended UI benefits would do the obvious thing of providing a lifeline to those workers and their families who have suffered the blow of job loss when the labor market is historically weak. Some have argued that extended benefits could actually make the labor market weaker by giving laid-off workers an incentive not to return to work. The empirical evidence strongly rejects this concern.
The most rigorous papers on this show that there is almost no delay in returning to workfor example a paper by Henry Farber of Princeton and Rob Valletta of the San Francisco Fed show that UI extensions in the Great Recession increased the time it took UI recipients to take another job by three percent. Further, a slight increase in search-time is actually a benefit of UIthe point is to give liquidity-constrained unemployed workers a little space to find a job-match that will provide durable benefits to both them and potential employers. For example, it may not be optimal for either workers or employers for people with young kids to be forced to take the first job available even if it comes with a two hour commute, as they will likely quit when as soon as a more convenient job becomes available.
Besides not hindering job-search, UI extensions also stimulate the macroeconomy and this stimulus generates jobs. A wealth of macroeconomic studies confirm that spending on UI extensions is one of the most effective mechanisms available for injecting money into the economy, since the long-term unemployed are, almost by definition, cash strapped and very likely to immediately spend their UI benefits. This spending creates demand for goods and services, and who provides goods and services? Workers. Thus, it generates jobs. We estimate that if we allow UI extensions to lapse for all of 2014, it will cost the U.S. economy about 300,000 jobs by the end of the year.
Demo_Chris
(6,234 posts)Again. With no effort made to address the inequality built into any long term extensions. If we want long term or permanent welfare, I am totally on board with it. But a long term welfare program that pays out based on what you earned while employed? Screw that. After a few months a former investment banker and a former KFC fry guy should be treated exactly the same.
MindPilot
(12,693 posts)Here in CA, UI will pay roughly 50% of your income up to a maximum of $450 per week for 26 weeks. So equality starts day one with everybody losing at last half their income, and your hypothetical investment banker losing considerably more; if he was making 90k, he just lost 3/4 of his income.
UI is not welfare--it is insurance bought and paid for with the express purpose of replacing at least some of your income if you become unemployed.
Demo_Chris
(6,234 posts)Then the system should be short term only. If we want to offer some form of safety net beyond this short term benefit we must treat everyone equally.