Right-wing media renew assault on unemployment insurance
Fox Business' Charles Payne and MSNBC's Pat Buchanan both promoted the myth that extending unemployment insurance disincentivizes unemployed individuals from searching for work. But economists agree that during a period of economic downturn, unemployment insurance does not discourage recipients from seeking jobs.
Right-wing media promote myth that unemployment insurance provides a disincentive to find work
Payne: “You may actually be doing people a favor by saying 'you got to get off the sofa.'” On the November 19 edition of Fox News' Fox & Friends, Fox Business contributor Charles Payne, discussing the extension of unemployment insurance, suggested that benefits keep people from “get[ting] off the sofa.” From Fox & Friends:
PAYNE: In other words, the message of the people right now is cut spending. And it's tough because you're always painted or portrayed as being villainous or evil but by the same token, you know people who are unemployed two years, three years, they lose their skills, they lose their desires and in some ways, you may actually be doing people a favor by saying “you got to get off the sofa.” You have to get off the sofa.
Buchanan: “There is an argument that the longer you continue the unemployment, the more people will hold off going back looking for a job.” On the November 19 edition of MSNBC's Morning Joe, contributor Pat Buchanan claimed “quite frankly, there is an argument that the longer you continue the unemployment, the more people will hold off going back looking for a job. I know that's considered hard and cruel. But why would Democrats vote that way?”
Economists agree unemployment benefits not a disincentive to search for work during economic downturn
Krugman: Charge that extending benefits makes unemployment worse during a recession is “dead wrong.” In a July 4 op-ed, Nobel Prize-winning economist Paul Krugman wrote that people who believe “that extending benefits would make unemployment worse” are “dead wrong.” Krugman explains that although the effect is “slight,” unemployment benefits reduce the incentive to seek work “when the economy is doing well. But it's an effect that is completely irrelevant to our current situation” because there currently are fewer available jobs than unemployed workers. According to Krugman:
When the economy is booming, and lack of sufficient willing workers is limiting growth, generous unemployment benefits may keep employment lower than it would have been otherwise. But as you may have noticed, right now the economy isn't booming -- again, there are five unemployed workers for every job opening. Cutting off benefits to the unemployed will make them even more desperate for work -- but they can't take jobs that aren't there.
Labor economist Lawrence Katz says possibility of unemployment benefits extending joblessness isn't currently a concern due to the scarcity of jobs. In an August 2009 New York Times article, Harvard labor economist Lawrence Katz reportedly said that the claim that unemployment benefits prolong unemployment “should not be a concern now because jobs remain so scarce.” From the Times article:
Traditionally, many economists have been leery of prolonged unemployment benefits because they can reduce the incentive to seek work. But that should not be a concern now because jobs remain so scarce, said Lawrence Katz, a labor economist at Harvard.
For every job that becomes available, about six people are looking, Dr. Katz said. “Unemployment insurance gives income to families who are really suffering and can't find work even if they are hustling to look,” he said.
With the economy still listing, he added, a temporary extension can provide a quick fiscal stimulus. And, Dr. Katz said, when people exhaust unemployment and health insurance, many end up applying for disability benefits, which become a large, unending drain on the Treasury.
MarketWatch chief economist Irwin Kellner: "[T]here are now more than five applicants for every job. Clearly, this is not caused by more benefit checks." In a July 13 MarketWatch op-ed, chief economist Irwin Kellner wrote:
To the extent that duration of unemployment and benefit checks move together, it is a spurious correlation, like electric motors and school grades. Both may appear to correlate, but in actuality they are related to something else.
In the case of the duration of unemployment and number of benefit checks, both are really determined by the lousy economy!
Specifically, I am referring to the after-effects of the bursting of the housing bubble, the financial crisis and technological change, which resulted in the worst recession in 70 years and the highest overall jobless rate since the 1930s.
As a consequence there are now more than five applicants for every job. Clearly, this is not caused by more benefit checks.
Washington Post: Unemployment benefits are “probably not discouraging many people from accepting available work,” because in “reality ... jobs [are] scarce.” A July 13 Washington Post editorial also pointed out that low job openings make the argument that unemployment benefits keep workers from finding jobs irrelevant: “In theory, longer periods for drawing benefits reduce recipients' incentives to find work. In the current reality, with jobs scarce and unemployment benefits hardly lavish, the program is probably not discouraging many people from accepting available work.”
Alan Greenspan: “When you're in a period of job weakness ... then obviously you want to be temporarily generous.” In 2003, former Federal Reserve chairman Alan Greenspan said to the Joint Economic Committee:
Unemployment insurance is essentially restrictive because it's been our perception that we don't want to create incentives for people not to take jobs. But when you're in a period of job weakness, where it is not a choice on the part of people whether they're employed or unemployed, then obviously you want to be temporarily generous. We ought to be temporarily generous.
And I think that's what we have done in the past and it has worked well.
I think that because it is stringent in normal periods, that one should recognize that people who lose jobs not because they did anything and can't find new ones, you have a different form of problem, which means that you have to allow the unemployment system to be much broader and, indeed, that's what we need to do.