Do Unemployment Benefits Increase Unemployment?

[mettech]

 

 

If you lose your job and collect unemployment are you more likely to stay unemployed until your benefits run out? Judging by a recent study from Denmark the answer is yes:

Many people get a job within the first three months of entering the system, but many more wait until just before benefits expire to take anything available.

It shows that between 2005-7, the number of people who got jobs during their four years of benefits — the green line – rose at the beginning before dropping sharply, then spiked as benefits were about to run out, only to plummet after. The red line shows similar behavior in 1998, when Denmark’s benefit period was five years.

We have seen a similar trend in the United States where Democrats have given most people more than two years worth of unemployment benefits. This juicy tidbit from the Wall Street Journal:

“The second way government assistance programs contribute to long-term unemployment is by providing an incentive, and the means, not to work. Each unemployed person has a ‘reservation wage’—the minimum wage he or she insists on getting before accepting a job. Unemployment insurance and other social assistance programs increase [the] reservation wage,

causing an unemployed person to remain unemployed longer

.”

Full credit goes to

Lawrence H. Summers

, the current

White House economic adviser

, who wrote those sensible words in his chapter on “Unemployment” in the Concise Encyclopedia of Economics, first published in 1999.

Going back to an article on Capitol Commentary from February of 2010 we find this fact:

As the Federal Reserve’s Open Market Committee minutes for January noted: “The several extensions of emergency unemployment insurance benefits appeared to

have raised the measured unemployment rate

, relative to levels recorded in past downturns, by encouraging some who have lost their jobs to remain in the labor force. … Some estimates suggested it

could account for 1 percentage point or more of the increase in the unemployment rate

during this recession.”

http://capitolcommentary.com/2010/08/18/do-unemployment-benefits-increase-unemployment/

[Trimdingman]

Unemployment insurance is useless.

 

If you are a saver, you can live off your savings until you are re-employed.

 

If you have a job where you are never laid off, you are paying for nothing.

 

If you have no savings and get laid off, you are screwed anyway because you have to put in a waiting period. You will be forced to go out and get a job right away.

 

If you are a seasonal worker, your employer has a vested interest in getting you back because of your training. He has to pay you enough so you can put enough away to live on during the off season. If he knows that you will be eligible to collect Unemployment Insurance benefits, he can pay you less; so he is actually the one benefitting from it.

 

Out of the pool of money collected from payroll deductions to fund unemployment insurance, a large portion goes into administration. They have to figure out how much to pay each individual, and also police against fraud. It opens a whole can of worms. This drain on the economy creates a vicious circle creating more and more unemployment and adding to the government debt bubble.

 

If people started taking charge of their own finances instead of relying on the government to look after them, where would that leave the government? We wouldn't need the government.

 

Every government program that can be gotten rid of is one more chain removed from the people and one more nail in the government's coffin.

Edited July 22, 2012 by Trimdingman

[rn4]

Unemployment insurance is useless.

 

If you are a saver, you can live off your savings until you are re-employed.

 

If you have a job where you are never laid off, you are paying for nothing.

 

If you have no savings and get laid off, you are screwed anyway because you have to put in a waiting period. You will be forced to go out and get a job right away.

 

If you are a seasonal worker, your employer has a vested interest in getting you back because of your training. He has to pay you enough so you can put enough away to live on during the off season. If he knows that you will be eligible to collect Unemployment Insurance benefits, he can pay you less; so he is actually the one benefitting from it.

 

Out of the pool of money collected from payroll deductions to fund unemployment insurance, a large portion goes into administration. They have to figure out how much to pay each individual, and also police against fraud. It opens a whole can of worms. This drain on the economy creates a vicious circle creating more and more unemployment and adding to the government debt bubble.

 

If people started taking charge of their own finances instead of relying on the government to look after them, where would that leave the government? We wouldn't need the government.

 

Every government program that can be gotten rid of is one more chain removed from the people and one more nail in the government's coffin.

 

Here in the states there is no payroll deduction for unemployment insurance, it is payed into the system by the employer.

[xr7g428]

Rn4, you do realize that hiding it from the employee doesn't make it any less real...

[RangerM]

Rn4, you do realize that hiding it from the employee doesn't make it any less real...

I'm quite sure he knows it's real, however whether he realizes that any unemployment insurance costs are borne by the employees, the customers, or the shareholders is another matter. Employers (ie. businesses) are conduits of money, not the source.

[Edstock]

Denmark is a small country with 7 million people, that has been settled for something like 1,000 years. Thus Denmark's circumstances are completely different than the US with 350 million people, and how Danish workers may act has no real relevance to US labor conditions.

 

But if conservatives want to use it to demand that unemployment benefits be eliminated, fine by me. Poor people are ugly and stupid, and they pollute. The faster they can die off, the better. That's why we need to give 'em even bigger servings of junk food.

[Versa-Tech]

Denmark is a small country with 7 million people, that has been settled for something like 1,000 years. Thus Denmark's circumstances are completely different than the US with 350 million people, and how Danish workers may act has no real relevance to US labor conditions.

 

But if conservatives want to use it to demand that unemployment benefits be eliminated, fine by me. Poor people are ugly and stupid, and they pollute. The faster they can die off, the better. That's why we need to give 'em even bigger servings of junk food.

This is a perfect example of the inherent flaw in the liberal argument. The denial of human nature.

 

Are you really so bold to suggest that, just because we have cultural differences that, somehow or another, the average joe in the US is immune to the fallible nature of the average Johan in Denmark? Greece? Italy? Spain? France?

 

Sounds like an extreme case of American Exceptionalism to me. But wait, isn't the denial of such principles the principle (I know, punny) argument for adopting said countries policies?

 

Would not that suggest a severe flaw in the entire liberal economic argument. Or did you just admit, unknowingly, that your argument isn't actually based on principles?

 

Either Americans are exceptional or not. You can't argue one ideology as it suits you, and flip sides to balance the equation as it suits you.

 

Perhaps I have constructed a straw-man here, but I really don't understand this selective conviction. It only holds water if ignorance is assumed... Or constitutional dishonesty, which is quite literally a mental illness.

 

I don't like to entertain such elitist assumptions, but the only logical alternative would suggest intentional dishonesty, and that would entertain some assumption of moral superiority. When it really comes down to it, you can give fiscally liberal arguments every benefit of the doubt, and your ultimately confined to some discerning judgement of fiscal consertative superiority.

 

The same can be said of socially conservative arguments, which are equally flawed for the same reasons.

Edited July 22, 2012 by Versa-Tech

[Trimdingman]

Denmark is a small country with 7 million people, that has been settled for something like 1,000 years. Thus Denmark's circumstances are completely different than the US with 350 million people, and how Danish workers may act has no real relevance to US labor conditions.

 

But if conservatives want to use it to demand that unemployment benefits be eliminated, fine by me. Poor people are ugly and stupid, and they pollute. The faster they can die off, the better. That's why we need to give 'em even bigger servings of junk food.

 

Government is the reason why we have so many poor people. Conservatives can see past the end of their noses, unlike Liberals. We want prosperity for the masses. Liberals like to have someone to look down on. They are too stupid to be able to look down on Conservatives, so they create poor people under the guise of trying to help them.

[Langston Hughes]

Government is the reason why we have so many poor people. Conservatives can see past the end of their noses, unlike Liberals. We want prosperity for the masses. Liberals like to have someone to look down on. They are too stupid to be able to look down on Conservatives, so they create poor people under the guise of trying to help them.

 

I'm sorry but this is seriously nothing short of a bullshit personal attack under the guise of your political philosophy. You can say that governments create poverty and liberals are stupid and I can say that free market capitalism creates poverty and conservatives are stupid heartless bastards but where does that get us and why even bother? What would be the point of doing so? To get some BON Off Topic street cred from the people on our side of the argument? There really is no point to any of that. It's often said that there are three sides to every story, yours, mine and the truth. So perhaps we need to find a middle ground where we could figure out what are the good points of both and truly find a way to reduce poverty.

[Cocheese]

I'm sorry but this is seriously nothing short of a bullshit personal attack under the guise of your political philosophy.

 

dad, that, along with many of your ink, has been your SOP under this username, as well as your old one, since the day you started posting. Stop being a hypocrite.

[Langston Hughes]

dad, that, along with many of your ink, has been your SOP under this username, as well as your old one, since the day you started posting. Stop being a hypocrite.

 

I don't know what your general problem is but If you don't like what I post feel free to block or ignore me. I don't know you, i don't care to know you and since I have no personal feelings towards you it would not bother me in the least to know your not paying attention to what I post. Now I stand behind what I posted that short, over generalized comments that call a large group of people names are bullshit. I didn't say he was stupid or that conservatives were stupid. If you wish to have a discourse over politics, policy, the general direction of this and other countries let me know.

[Edstock]

This is a perfect example of the inherent flaw in the liberal argument. The denial of human nature. Huh? How's the meds? I haven't denied "human nature", all I have done is pointed out how different it is to live in Denmark.

 

Are you really so bold to suggest that, just because we have cultural differences that, somehow or another, the average joe in the US is immune to the fallible nature of the average Johan in Denmark? Greece? Italy? Spain? France? I haven't suggested anything of the kind, YOU have. Again, all I pointed out is that the psychological and economic circumstances for Danes are not the same as they are for Americans.

 

Sounds like an extreme case of American Exceptionalism to me. But wait, isn't the denial of such principles the principle (I know, punny) argument for adopting said countries policies? If it's a case of "American Exceptionalism", it's how fascist financial controls have been adopted by America and refused by places like Iceland.

 

Would not that suggest a severe flaw in the entire liberal economic argument. Or did you just admit, unknowingly, that your argument isn't actually based on principles? No, it wouldn't; rather, it suggests that the American slide to fascist ideology is teflon coated so it slides down real easy. And my argument is not based, and never has been based "on principles" — you wanna run America like the Fourth Reich? Wanna run America like a Koch Brothers' wet dream? Go for it! You see, I don't care, I don't have to. Beautify America, get rid of poor people. Works for me. Wal-Mart might not like it, though, along with all those trailer parks in the flyover country.

 

Either Americans are exceptional or not. You can't argue one ideology as it suits you, and flip sides to balance the equation as it suits you. Oh, Americans are exceptional all right, when you look at the Birthers and Baggers and Fetus Fetishists and Jim Crow laws, this is self-evident, for sure.

 

Perhaps I have constructed a straw-man here, but I really don't understand this selective conviction. It only holds water if ignorance is assumed... Or constitutional dishonesty, which is quite literally a mental illness. Well, looking at the Supreme Court and the PAC propaganda finance laws, there seems to be a present-day Constitutional dishonesty in American politics, especially from the Goppers. You see the Birthers and Baggers, and yes, we have what is "quite literally a mental illness".

 

I don't like to entertain such elitist assumptions, but the only logical alternative would suggest intentional dishonesty, and that would entertain some assumption of moral superiority. When it really comes down to it, you can give fiscally liberal arguments every benefit of the doubt, and your ultimately confined to some discerning judgement of fiscal consertative superiority. Sorry, I can't make much out of this; there is some logic in it somewhere, but it is amorphous, ill-defined. Please re-state it, and this time, please describe "such elitist assumptions", whatever they may be (you never did get around to defining them, exactly). Funny how concerned about "elitism" the Koch critters are.

 

The same can be said of socially conservative arguments, which are equally flawed for the same reasons. Say whatever the hell you want, fine by me, but we should be appreciative of how the conservatives have expanded American vocabulary — before Reagan, nobody knew what you meant when you mentioned that people were "dumpster-diving".

[akirby]

Ed - all you seem to be able to do is call people names in a derogatory manner, accuse conservatives of wanting to kill poor people and complain about the current state of affairs.

 

Why don't you elaborate on what you would fix and how you would fix it because whining about something doesn't help.

 

Conservatives believe that most of the "poor" people are poor by choice because they're too lazy to work or they're not willing to put forth the effort to obtain higher education or training to get higher paying jobs. These people will do the bare minimum required of them to get by. If you take away public assistance then they'll go find a job.

 

I do agree that unemployment insurance is good but I also agree that many people abuse it by not looking for a job right away. That's just common sense. Many people would rather sit at home and collect a check for not working given a choice.

[Trimdingman]

I'm sorry but this is seriously nothing short of a bullshit personal attack under the guise of your political philosophy. You can say that governments create poverty and liberals are stupid and I can say that free market capitalism creates poverty and conservatives are stupid heartless bastards but where does that get us and why even bother? What would be the point of doing so? To get some BON Off Topic street cred from the people on our side of the argument? There really is no point to any of that. It's often said that there are three sides to every story, yours, mine and the truth. So perhaps we need to find a middle ground where we could figure out what are the good points of both and truly find a way to reduce poverty.

 

Government collects taxes from people and re-distributes the money. How many people does the government employ to do this? Do they use the money efficiently? Open your eyes. Most of our tax money is wasted. This takes away from our prosperity and creates poverty and unemployment. Government can't create jobs because the money it spends came out of our pockets so that we are not spending it ourselves and creating jobs. We will on average spend the money that we worked hard for more efficiently, without waste, than the government will that didn't have to work for it. People who work for the government, paid out of tax money, producing nothing, are a drain on our economy, also. All of this isn't hard to see if you can de-program yourself from a lifetime of indoctrination by government that government is necessary, and more government is the only way to go if times get tough. That worked for the USSR and Nazi Germany and Communist China, right?

[Versa-Tech]

Ed, I'm sorry. My argument was based on the reasonable assumption (or not :P ) that you actually believed your own argument. Of course, if you didn't, you wouldn't go so far as to explore the context of exactly what you were implying. My apologies that my logic is based in social science and historical fact, rather than confirmation bias.

 

Enough with the inflammatory rhetoric. If you lack the knowledge to articulate a reasonable point, why even bother?

[Langston Hughes]

Government collects taxes from people and re-distributes the money. How many people does the government employ to do this? Do they use the money efficiently? Open your eyes. Most of our tax money is wasted. This takes away from our prosperity and creates poverty and unemployment. Government can't create jobs because the money it spends came out of our pockets so that we are not spending it ourselves and creating jobs. We will on average spend the money that we worked hard for more efficiently, without waste, than the government will that didn't have to work for it. People who work for the government, paid out of tax money, producing nothing, are a drain on our economy, also. All of this isn't hard to see if you can de-program yourself from a lifetime of indoctrination by government that government is necessary, and more government is the only way to go if times get tough. That worked for the USSR and Nazi Germany and Communist China, right?

 

I'm sorry but I don't agree and other than words and general philosophy could you perhaps show me the evidence? I would like to point out that a majority of our workforce produce nothing, only provide services which is what a public workforce usually does.

[Versa-Tech]

 

 

I'm sorry but I don't agree and other than words and general philosophy could you pmkerhaps show me the evidence? I would like to point out that a majority of our workforce produce nothing, only provide services which is what a public workforce usually does.

A service is a product. By your logic, there isn't a single manufacturer that produces anything. After all, they didn't produce the resources used to build their product, they only provided the surface of refining, shaping, and assembling them.

 

You're an intelligent guy. If you can't see the evidence of government waste, it's because you don't want to.

 

[Langston Hughes]

A service is a product. By your logic, there isn't a single manufacturer that produces anything. After all, they didn't produce the resources used to build their product, they only provided the surface of refining, shaping, and assembling them.

 

You're an intelligent guy. If you can't see the evidence of government waste, it's because you don't want to.

 

Lets take this a bit slower. I disagree with Trim that government is the problem and I left the debate suggesting that a majority of our workforce is in services whether that is public or private. My distinction about production was that goods are produced and services are rendered. Thus the majority of our workforce is not in manufacturing or farming and not in production.

[Versa-Tech]

 

 

Lets take this a bit slower. I disagree with Trim that government is the problem and I left the debate suggesting that a majority of our workforce is in services whether that is public or private. My distinction about production was that goods are produced and services are rendered. Thus the majority of our workforce is not in manufacturing or farming and not in production.

I can agree with that. However, I would say that government is responsible for creating the housing bubble, amongst others, by manipulating the markets. The credit system is next to fail.

[Langston Hughes]

I can agree with that. However, I would say that government is responsible for creating the housing bubble, amongst others, by manipulating the markets. The credit system is next to fail.

 

I would agree that the government had a large part in the housing bubble and that under regulated financial industries the rest.

[Trimdingman]

How much money does the government spend to collect taxes? Nothing is produced there. How much money does the government spend distributing unemployment benefits? If they got rid of that program, and let people save for their own rough patches, it would save a lot of money and make people more responsible. How much money does the government spend on the "war on drugs"? If they legalized drugs, users could find affordable sources or make them or grow them themselves, and the gangs, shootings, and drug poverty would end. Then we would only need half of the police force, courts, and prisons. More government waste. Get rid of vehicle registrations and drivers' licenses. Get rid of the FBI and the supreme court. State level police and courts are enough. I could go on and on. Many will not agree with all of my ideas, but you should agree with enough of them to see that government wastes a lot of money.

[Langston Hughes]

The government is inefficient but I don't believe your premise is the solution to inefficiency.

[Edstock]

This is a perfect example of the inherent flaw in the liberal argument. The denial of human nature.

 

Are you really so bold to suggest that, just because we have cultural differences that, somehow or another, the average joe in the US is immune to the fallible nature of the average Johan in Denmark? Greece? Italy? Spain? France? I haven't suggested anything of the kind — all I stated was that the Danish perspective is not the same as the American perspective. You can derive whatever conclusions from that, that you want.

 

Sounds like an extreme case of American Exceptionalism to me. But wait, isn't the denial of such principles the principle (I know, punny) argument for adopting said countries policies?

 

Would not that suggest a severe flaw in the entire liberal economic argument. Or did you just admit, unknowingly, that your argument isn't actually based on principles? Somehow, you seem to extrapolate into irrelevant areas. I have no idea just what you are trying to explain.

 

Either Americans are exceptional or not. Americans are not exceptional; America was, and may still be, if the Goppers don't destroy the Constitution You can't argue one ideology as it suits you, and flip sides to balance the equation as it suits you.

 

Perhaps I have constructed a straw-man here, but I really don't understand this selective conviction. It only holds water if ignorance is assumed... Or constitutional dishonesty, which is quite literally a mental illness.

 

I don't like to entertain such elitist assumptions, but the only logical alternative would suggest intentional dishonesty, and that would entertain some assumption of moral superiority. When it really comes down to it, you can give fiscally liberal arguments every benefit of the doubt, and your ultimately confined to some discerning judgement of fiscal consertative superiority.

 

The same can be said of socially conservative arguments, which are equally flawed for the same reasons.

Ed - all you seem to be able to do is call people names in a derogatory manner you seem fixated on accusing me of "name calling", accuse (reading comprehension problem of yours: I did not 'accuse' conservatives of wanting to kill poor people) conservatives of wanting to kill poor people the rich conservatives don't really want to kill poor people — unless, of course, there's a profit to be made — they see them as a mindless market for cheap stuff from China, and cheap high-starch/high-fat 'junk' foods (king corn) and complain about the current state of affairs.

 

Why don't you elaborate on what you would fix and how you would fix it because whining about something doesn't help.

 

Conservatives believe that most of the "poor" people are poor by choice because they're too lazy to work or they're not willing to put forth the effort to obtain higher education or training to get higher paying jobs. These people will do the bare minimum required of them to get by. If you take away public assistance then they'll go find a job.

 

I do agree that unemployment insurance is good but I also agree that many people abuse it by not looking for a job right away. That's just common sense. Many people would rather sit at home and collect a check for not working given a choice.

[akirby]

reading comprehension problem of yours: I did not 'accuse' conservatives of wanting to kill poor people

 

I don't see any other possible comprehension of these statements:

 

But if conservatives want to use it to demand that unemployment benefits be eliminated, fine by me. Poor people are ugly and stupid, and they pollute. The faster they can die off, the better. That's why we need to give 'em even bigger servings of junk food.

 

the rich conservatives don't really want to kill poor people — unless, of course, there's a profit to be made — they see them as a mindless market for cheap stuff from China, and cheap high-starch/high-fat 'junk' foods

[Langston Hughes]

I don't see any other possible comprehension of these statements:

 

Right or wrong he's making a case for willful ignorance on the part of conservatives and offering up the premise that they would die so you could not say later that you didn't know. Very similar to the far ranging posts by Immawhosure in that they both assume the other side is ignorant for one of many reasons and that they are the ones who can explain it. There is also the same incessant need to use caustic nicknames, such as gopperspew and Biggie Deficit, although Ed's is a bit more personal and Rich's a largely stereotypical.