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2014’s Employment Boom Almost Entirely Due to the Expiration of Unemployment Benefits

Discussion in 'Sports and News' started by YankeeFan, Jan 26, 2015.

  1. JC

    JC Well-Known Member

    If that were the case Theee Bags he'd never post.
     
  2. Twirling Time

    Twirling Time Well-Known Member

    Something isn't adding up. You need the worker to come off the dole, but you also need the job to come open in the first place. It's apparent that more jobs were created in 2014. That's not the same thing as more workers looking for jobs. It's not a one-for-one deal.
     
  3. doctorquant

    doctorquant Well-Known Member

    Lots of folks treat growth in jobs as akin to a river flow ... "The economy churned out X new jobs this month, so more people were able to get one." That's not really the right way to look at it. Jobs growth reflects both employers' willingness to consume labor and employees' willingness to supply labor; these forces are inseparable.

    Unemployment benefits, etc., act to shift the labor supply curve leftward, meaning that you have fewer workers willing to supply their labor at the prevailing wage rate. If there is a substantive lessening of these benefits, the labor supply curve shifts rightward, meaning that there are more workers willing to supply their labor at the same prevailing wage as before.

    It might help to think of the marginal worker ... we'll call him Joe. Let's say that under a given Unemployment Insurance (UI) regime, Joe can almost certainly find a job for which he's worth* $10 an hour. If he looks high and low, and is willing to wait, he's got an OK chance at finding a job at which he's worth $12.50 an hour. And if he's willing to roll the dice and look around long enough, there's a slight chance that he'll find a job at which he's worth $15 an hour.

    Now, let's say that there's a change in the UI regime. Suppose the change means that Joe's benefits are about to run out. He's going to become much more inclined to settle for the $10 an hour gig. Alternatively, let's assume that a UI regime is become more generous -- longer or larger benefits. Joe is going to become more inclined to hold back and keep beating the bushes for that $15 an hour job.




    *I choose this "for which he's worth" phrasing deliberately. Employers won't generally pay more for an employee's labor than that labor is worth (to those employers).
     
    Last edited: Jan 27, 2015
    Joe Williams likes this.
  4. Baron Scicluna

    Baron Scicluna Well-Known Member

    Precisely. It's not like a bunch of unemployed people decide to look for work and employers suddenly decide to create a job and hire them. The jobs are created first, then the workers apply for them.
     
  5. LongTimeListener

    LongTimeListener Well-Known Member

    No, Baron, here I'm going to go with dq. (I know. Talking business and someone would side with dq over Baron. It's crazy.)

    California's unemployment, for a time, worked out to something like $23K-$25K a year. Therefore, a job that paid even $30-35K wasn't worth it, because essentially you'd be "earning" about three dollars an hour ($120/week or $6,000/year) more than you would get for doing nothing. If it's a person who had day-care concerns, the break-even point was more like $50K before they'd think about taking a job.

    The numbers would be different in other states, but the principle is the same.
     
    Joe Williams likes this.
  6. Baron Scicluna

    Baron Scicluna Well-Known Member


    At the peak of the Recession, there were something like for every job opening, there were seven applicants. Before that, it was roughly three applicants for every job opening. Which means that, during the Recession for every opening, there were six people getting rejection notices (if they heard from them at all).

    Cutting off their benefits at that time wouldn't necessarily have motivated them to search for work. They still might have remained jobless anyways. Plus, in many states, unemployment requires them to search for work and document it.
     
  7. doctorquant

    doctorquant Well-Known Member

    Yeah, that's what I said... that UI makes the unemployed less motivated to look for work.

    Oh, wait ... that's not what I said.
     
  8. bigpern23

    bigpern23 Well-Known Member

    Like anything else, it's not as simple as "If X, then Y." There will always be people who are trying to game the system and get something for nothing. It's all just a balancing act to make sure that we provide as large of a safety net to those who need it, without making it so easy to game the system that a large group of people can mooch off it.

    Personally, I'm happy to contribute to a system that errs on the side of helping those in need at the risk of helping those who simply mooch. Like many of us in journalism, I've been laid off and needed that safety net, so I'm glad it's available. If helping 10 families pay their bills while the breadwinner searches for a job means letting 1 or 2 or 3 people mooch of the system, well, I think that's better than seeing 10 families go without food, or lose their house.
     
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  9. YankeeFan

    YankeeFan Well-Known Member

    It's not so much that they're mooching. It just doesn't make sense for someone to take a job that pays barely more than what they're getting in benefits, especially when you factor in commuting time and costs, and potentially child care costs.

    It's not an active decision to game the system.

    The problem is that if you extend these benefits for 99 weeks, it's no longer a safety net that allows someone who is unemployed to pay the rent/mortgage and put food on the table while looking for a new job. The incentive to find new work isn't strong enough, and it basically ruins someone's work history if they're out of the workforce for two years.

    It no longer becomes an act of compassion. It traps them.
     
  10. Mr. Sunshine

    Mr. Sunshine Well-Known Member

    By design.
     
  11. doctorquant

    doctorquant Well-Known Member

    I consider myself very fortunate to have never really been without a job. As a graduate student things got a bit dicey once -- when my wife was home after having our second child -- because I couldn't figure out how to work a job into my school schedule, but that's not the same thing. Regardless, I've never been on a job hunt of the sort implied when we are talking about unemployment benefits, and I've never drawn those.

    For those of you who have been on unemployment, at what point in your search did you begin to adjust your sights downward? I would assume that early in a search you focused on finding something similar (work-wise and money-wise). As time went by, however, surely you began looking into jobs that you wouldn't have considered before. How long did that take?
     
  12. Joe Williams

    Joe Williams Well-Known Member

    A lot of such support historically came from within families, communities and (gasp!) churches, but so many people now don't want to get their hands messy and instead flip the keys to inefficient government programs. A little gratitude and sense of obligation to the person helping you is a good thing, but we've severed that by having every charity going up and over the great government wall now. You don't have to look someone in the eye when you take the assistance and that makes it easier to take. (You don't look someone in the eye when you give the charity, either and that ... wait, it's taken from us, not voluntarily given? Never mind on that one then.)

    The looking-for-work requirement is laughable in many states -- it's no more rigorous than clicking an "I looked for work this week" box on a computer screen -- and even the bleedingest of hearts can see the aspects of human nature that can be triggered by a) extending benefits vs. b) curtailing them. As the article notes, "even liberal economists" agree with that.

    But the article looks at the macro impact of the change in UI duration. Many of us have anecdotal evidence that lines up on both sides -- legitimately unfortunate folks who cannot find proper work, even as they toil at menial jobs unrelated to their backgrounds and skills, as well as folks who time their re-entry to the work force according to their final unemployment check. The article, though, goes beyond that to suggest that the impact on employers -- in not feeding the UI beast for the more generous time periods -- is to fund more jobs. To do so, in fact, at a far higher level than the Administration's claims that folks getting less gov't cash to spend would hurt the economy and allegedly cost jobs.
     
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