Fox News dismissed the economic benefits of long-term unemployment insurance, erroneously characterizing the program as a “crutch” holding back economic growth.
On December 6, the Bureau of Labor Statistics released its unemployment report for the month of November. The national unemployment rate edged down from 7.3 to 7 percent, while the economy added a total of 203,000 jobs month-to-month, beating economists' expectations.
On the December 6 edition of Fox News' Your World, host Neil Cavuto and Fox Business contributor Charles Payne used the better than expected report to cast doubt on Rep. Nancy Pelosi's (D-CA) recent call to extend long-term unemployment benefits set to expire at the end of the year. Cavuto claimed that Pelosi was misguided for “talking up the need for extending jobless benefits and all of that in the face of more jobs” before Payne launched an all-out attack on social safety net programs:
PAYNE: Yeah, you know, it's really interesting as people, as we get more and more people coming off these jobless benefits, what are they doing? They're going back into the job market. What's happening? More jobs are being created. It's the exact opposite of what they're preaching in Washington which is the defeatist attitude. They don't believe in the American economic system. You know, it doesn't need all these crutches, it doesn't need all these aids. Let people come back into the job market, that's a sign of confidence; confidence is what this is all about. That's what will spark a real recovery. Unlimited unemployment benefits, 50 million people on food stamps, that's nutty stuff, you can do the math, you can talk about multiplier effects all you want, that's not what America was built on. This stock market wants people to get off these unemployment benefits after three years and look for a job, because they will eventually find a job and that's better for all of us.
Cavuto and Payne's claim that the strong jobs report indicates that unemployment insurance doesn't have to be extended -- in addition to claiming that allowing the program to expire would help the economy -- is at odds with reality.
Despite recent months of relatively strong job growth, the long-term unemployed -- the same people who are facing benefit cuts when the Emergency Unemployment Compensation (EUC) program expires later this month -- have seen little gain. According to economist Chad Stone of the Center on Budget and Policy Priorities, long-term unemployment currently “equals the highest rate achieved in any previous recession since the end of World War II.” Stone also noted that when previous emergency unemployment insurance programs expired, the long-term unemployment rate was at far lower levels.
If Congress fails to act and the EUC program expires, 1.3 million Americans will be immediately cut off from the program, with another 800,000 losing benefits in following months. The expiration of benefits represents a critical blow to a program that lifted 1.7 million out of poverty in 2012.
Besides directly benefiting the recipients of unemployment insurance, the program also provides a boost to the economy at large. According to the Congressional Budget Office, extending the EUC program until the end of 2014 “would increase inflation-adjusted GDP by 0.2 percent and increase full-time-equivalent employment by 0.2 million in the fourth quarter of 2014.” This increase in GDP and employment would be prompted by increased spending among recipients, which would encourage businesses “to boost production and hire more workers than they otherwise would, particularly given the expected slack in the capital and labor markets.”
Payne's assertion that cutting off benefits would inspire people to re-enter the workforce relies on the well-worn falsehood that unemployment insurance discourages people from finding work. The fact of the matter is that long-term unemployment remains elevated due to a lack of available jobs and possible discrimination.