Labor & Employment Law

Lack of Jobs, Not ?Generous? UI Benefits, Keep Unemployed Jobless

By Mike Hall

You?ve really got to wonder if any of the Republican lawmakers, conservative think-tankers and right-wing bloggers who continue to claim that jobless workers would rather collect unemployment insurance (UI) benefits than find a job have ever lived in the real world.

Thankfully, it?s been a long time, but when I was collecting UI, I was busting my hump to find work because the $190 or so a week UI check didn?t go too far. Same thing with my wife when she was out of work back then. Everybody I?ve known who?s been on UI would gladly have traded that UI check for a paycheck. If you ask the nearly 15 million people out of work today?almost half for more than six months?they?d make the same deal.

Republican senators, with the support of their usual gang of cronies, have four times blocked legislation to extend UI benefits for the long-term unemployed. With the extensions expired, more than 2 million Americans have lost their unemployment benefits, according to the Economic Policy Institute (EPI).

Republicans say they?re concerned about adding to the deficit. But there is enough chatter about ?generous benefits,? ?disincentives? and other code words for lazy on right-wing radio, Fox News political shows and conservative blogs to raise suspicion.

A congressional report last week blew away these bogus claims. But before we get into that, let?s take a look at some of the more ridiculous assertions. Remember the argument boils down to the disincentive a $300 a week UI check (national average) provides over a job with a regular paycheck and likely some benefits.

According to Sen. Judd Gregg (R-N.H), UI ?encourages people to, rather than go out and look for work, to stay on unemployment.?

Remember Tom DeLay?how can we forget?the former Republican House majority leader and now another conservative ranter and Tea Party booster? He says:

There is an argument to be made that these extensions, the unemployment benefits, keeps people from going out and finding jobs.

Then there?s John Lott, conservative blogger and Fox news contributor who claims that ?the unprecedented benefits are the cause, not the cure for the current long-term unemployment.? That is just plain otherworldly bizarre. How about pointing the finger at Wall Street, Big Banks, housing collapse, mortgage scams, credit crunches, trade imbalances and probably a dozen other contributing factors.

My favorite comes from Rep. Steve King (R-Iowa) who says, ?We shouldn?t turn the ?safety net? into a hammock.? Ah, what a life, a UI check, a hammock and a cold beverage or two. Who needs a job?

Let the Joint Economic Committee (JEC) provided some real world counterbalance to the fantasy of kicked-back UI comfort. The JEC is a joint, bipartisan House and Senate committee with 10 members from each house. Last week it issued a report, ?Does Unemployment Insurance Inhibit Job Search??

Citing the work of several prominent economists and former Federal Reserve Chairman Alan Greenspan, the short answer is a resounding NO! Here are few nuggets from the report:

[S]ome worry that unemployment insurance benefits may inhibit unemployed workers from vigorously looking for or accepting a new job. Those fears are unfounded.

Unemployment benefits are not particularly generous?average weekly benefits are just 74 percent of the poverty threshold for a family of four. So it is unlikely that extended unemployment benefits inhibit individuals? job search efforts. Simply put, even a low-paying job is likely to provide more support than that offered by UI.

The report points out that as much as jobless workers may bust their tails looking for work, with five unemployed workers for every job opening, ?the jobs simply are not there yet.? If Republicans continue to block extending UI, the report warns that those who remain jobless are likely to

turn to another social assistance program that may be even more expensive than unemployment insurance. For instance, the [JEC] estimates that the cost of failure to extend unemployment benefits would result in $24.2 billion in additional spending on Disability Insurance benefits. Other programs, including Temporary Assistance to Needy Families and food stamps are likely to see a spike as well.

Penny smart, pound foolish?

As we?ve pointed out here before, there is a $1.60 economic return on every $1 spent on UI, as the unemployed quickly spend their benefits for food, housing, medical care, gas, etc. The JEC report says:

Every dollar of unemployment benefits that a recipient spends can generate a cascade of spending by others, providing a significant jolt to the nation?s economy in terms of both economic activity and employment. Therefore, extending unemployment insurance benefits not only helps struggling households, but can also spur the creation of job opportunities.

Maybe if the politicians, conservative columnists and right-wing media celebrities ever ventured out of their insulated little world and hung around with some out-of-work truck drivers, construction workers, nurses, accountants, teachers and factory hands, maybe, just maybe, they might find out there?s not a whole lot of lazy out there. There are not a whole lot of jobs out there, either.

Full post as published by AFL-CIO NOW BLOG on July 13, 2010 (boomark / email).