CBO acknowledges that unemployment insurance benefits are a cause of higher unemployment

Things are pretty grim: "The rate of unemployment in the United States has exceeded 8 percent since February 2009, making the past three years the longest stretch of high unemployment in this country since the Great Depression. CBO projects that the unemployment rate will remain above 8 percent until 2014. The share of unemployed people who have been looking for work for more than six months—referred to as the long-term unemployed—topped 40 percent in December 2009 and has remained above that level ever since."

What caused the higher unemployment rate?

Weak demand for goods and services, as a result of the recession and its aftermath, which results in weak demand for workers;
Mismatches between would-be employers’ needs and the skills or location of the unemployed;
Incentives for people to stay in the labor force and continue searching for work that result from extensions of unemployment insurance benefits; and
The erosion of unemployed workers’ skills and the belief of some employers that people who have been unemployed for a long time would be low-quality workers (a phenomenon sometimes called stigma).

I would have phrased the first two of these points differently. There are always jobs, though it depends on what price. The question is why people aren't taking the jobs that they can get.



Blogger Martin G. Schalz said...

I concur with the CBO on this, but what correlation, if any, is there in the Obama administrations claim of a drop in unemployment, and the increase of food stamp cases?

Very long term unemployment benefits cost a great deal of money, and why work if one gets paid not to? Also, with the sharp increase in food stamps possibly being related to this post of yours, and Obama's failure in leadership, how do we fix this?

Dependency on government handouts does nothing except produce more dependency. Is staying in office so important to Obama that he would drive us further into debt in order to have dependent voters?

Let's suppose that when one runs out of insurance benefits, and one is facing 'stigma', does not going to food stamps and or cash assistance make sense?

2/20/2012 1:31 PM  

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