Pethokoukis, Economics, U.S. Economy

99 weeks and Counting: Of course we should extend unemployment benefits. But that’s not all we should do

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The Emergency Unemployment Compensation program, under which some workers could receive benefits for up to 99 weeks, is about to expire. If it is not extended, some 1.3 million long-term unemployed workers — out of a staggering 4.1 million total long-term unemployed – will immediately lose benefits.

Why would this be a good idea (a) during perhaps the weakest economic recovery, both in terms of GDP and job growth in American history, and  (b) at a time when technology may be radically changing the nature of work in America? As AEI’s Michael Strain points out in The Weekly Standard:

These millions of workers are suffering​—​financially, emotionally, spiritually. Some of them may never work again, and may be forced to subsist on welfare, increasing the rolls and expense of those programs. Society is also suffering: A large pool of willing and able workers are idle; our already segmented society is even more segmented; our country is less dynamic, vibrant, and thriving.

But just extended the programs over and over isn’t a good idea either. Again, Strain:

1. One thing conservatives might push for is relocation assistance​—​to help the long-term unemployed move from a bad local labor market to a good one. The job market varies widely across cities and states. Instead of continuing to cut UI checks to a New Jersey worker who has been unemployed for eight months, why not cut him a check to help him move to North Dakota, where he has a much better chance at getting a job?

2. As mentioned above, the evidence suggests that many long-term unemployed workers are “scarred”​—​their lengthy spell out of the workforce is making it difficult for them because firms view workers who have been unemployed for so long as risky hires. Why not reduce the risk associated with the hire by lowering the minimum wage for long-term unemployed workers? A firm may not want to take a $7.25-per-hour risk on a long-term unemployed worker, but might be willing to take a $4 risk. If we lower the minimum wage for the long-term unemployed, then we’ll need to supplement their earnings with an expanded Earned Income Tax Credit or some other government-funded wage subsidy.

3. To help make sure that we aren’t adding any new workers to the rolls of the long-term unemployed, states without worksharing UI programs​—​about half of them at the moment​—​should start them. Under worksharing, a worker who has his hours reduced by his employer in response to a temporary lull in demand can receive a prorated UI benefit. This makes it easier for firms to reduce employees’ hours by, say, 20 percent, rather than laying off 20 percent of their workforce. Government shouldn’t tilt the scales towards layoffs by prohibiting workers who have their hours reduced from receiving prorated UI benefits.

4. One way to[help the unemployed back to work and boost economic mobility] would be to improve transportation networks within cities and their outlying areas in order to shorten commute times from low-income neighborhoods to employment centers.

Recent research from economists at Harvard and the University of California, Berkeley, suggests that socioeconomic segregation within cities and their outlying areas plays an even greater role in limiting the ability of low-income Americans to rise than was previously thought. Many low-income Americans face commute times measured in hours, not minutes. Public policy can shorten the distance between working-class neighborhoods and employment centers by shortening commute times for low-income workers.

In its cheapest incarnation, this would involve extra buses that run nonstop from low-income neighborhoods to employment centers, both in city centers and in suburbs. And of course, more money for better roads, bridges, and tunnels would shorten commute times for everyone, including the working poor.

11 thoughts on “99 weeks and Counting: Of course we should extend unemployment benefits. But that’s not all we should do

  1. These millions of workers are suffering​—​financially, emotionally, spiritually“…

    Oh boo! hoo!

    Society is also suffering: A large pool of willing and able workers are idle“…

    At best a questionable statement…

    If we lower the minimum wage for the long-term unemployed, then we’ll need to supplement their earnings with an expanded Earned Income Tax Credit or some other government-funded wage subsidy“…

    Why?

    Meanwhile back in the real world Zero Hedge gives us the following: The Other America: “Taxpayers Are The Fools… Working Is Stupid”

    • In Juandos’ world, Jonathan Swift’s “Modest Proposal” (let’s eat Irish babies) is met with a question: BBQ or oven roast?

    • Exactly. At most, give them a free rental of the movie “Cinderella Man.” There is work out there screaming to get done, and with CraigsList and inexpensive printers, there is ZERO reason why someone can’t get the word out that they will bust their hump and work, even if it is a menial job (until a better one comes along). Gutters need cleaning, sidewalks need shoveling, gardens need weeding, trash needs picking up, graffiti needs painting over, decks and driveways need pressure washing, trash needs hauling, etc.

      Of course, my viewpoint comes in part from being raised where our family of nine was living in a 2-bedroom, 1-bath 768sf concrete-block-on-slab house (where four of us slept in an unheated 1-car garage). We ate the most inexpensive of foods (powered milk – yum!), always wore hand-me-downs, and were basically a poor family living on one blue-collar paycheck and no government handouts of any kind. But we all worked for spending money (because there was no allowance), picking berries, doing lawn care, paper routes, car washing, painting, grocery store work, etc. It didn’t kill us, it lifted us all up by cementing in all of us a strong work ethic.

  2. According to Zillow, a home in Island Falls ME should fetch $37/SF at sale, or roughly a quarter of what a mobile home in Williston ND brings. You are 50 years old, lived in Island Falls all your life, have no mortgage. Do you take Strain’s relo assistance or do you say no thanks?

  3. Does Jimmy P. have an “unpaid intern” to research and correct his headlines. I hear “juandos the dumbass” is available. Ooops. Moving from a shack in Missouri to D.C. is not an option.

    Today, 73 weeks in Rhode Island, Illinois and Nevada is the max.

  4. We should extend benefits indefinitely, along with ZIRP and QE.

    Everything will be just fine, the economy is doing great, and is rapidly improving.

    Obamascare is already paying dividends, and has dramatically lowered the cost of medical care, and enhanced delivery, while granting access to millions of uninsured, and allowing worker mobility and health insurance maintenance.

    New regulation has led to millions of new jobs, and unemployment is the lowest it has ever been.

    HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

    [This is the actual Obamugabe economics view]

  5. The idea of a lowered minimum wage for long term unemployed comes from the ignorant as most of the long
    term unemployed were highly skilled jobs and will only
    hurt the lower end people as employers simply will not hire unemployed tech workers for a minimum wage job
    or even jobs well above it as they do not want to hire
    someone with skills for an unskilled job who will leave
    at the first chance that arises. Not to bash Wallmart or
    Amazon but that is the case at those places!

  6. Thoughtful blogging. We also have 12 million receiving disability checks from the VA and through SSDI (one half of returning vets claim disability under Obama).
    Not sure about unemployment and disability…suspect abuse…for sure cut taxes on wages…

  7. “Pay for people to relocate”? We are $17 TRILLION in debt!
    Honest to God I had to check to make sure this was AEI. Has AEI been hacked?

  8. Mary,

    You are 100% correct. Our national debt has exploded due to lazy, unemployed people with graduate degrees and years of experience who rather take $400 a week of UI than a job that pays a living wage, benefits and provides for a family. The deficit is NOT due to 1) two wars that we did not pay for 2) a huge pork barrel give away to seniors to pay for RX’s or 3) a “temporary” tax cut that has lasted 13 years and provides for lowest amount of revenue/GDP in our nation’s history.

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