Unemployment Pit Redux


At the beginning of the month I posted a minority viewpoint regarding my support for wacky Senator Jim Bunning and his protest against extending unemployment benefits yet again.

I heard from several people about my opinion and it included lots of “not me” comments. I do understand the perspective having been down that path before.

Help Wanted. No Thanks.Just yesterday Marnee Klein sent me a link to a column in the New York Times that speaks volumes about the concern. The interesting part about this is that Marnee was one of the people who seemed to take the other viewpoint initially and sent me a piece also in the New York Times from my favorite economist: Paul Krugman. In that piece Krugman was making the case that extending unemployment didn’t matter. I found it refreshing that someone would actually take the time to send me links about both sides of any issue. Of course we all know Marnee is one of the good people.

Anyway, this new piece drives my point home by showing a study done of unemployment recipients in Pittsburgh a number of years ago. It clearly showed that, just as I had surmised, magically people “found” work (be it a new job or returning to their old one) on the very week their unemployment benefits ran out. How many people did this apply to? 30% of those collecting. Think about that. When you see the numbers the point is crystal clear. In the weeks leading up to the end date of benefits very few found new jobs and then, suddenly, 30% find work. The week after benefits ran out 12% more found work.

Again, I’m sympathetic to the situation and times are pretty unique right now but I don’t see that the answer is to just keep paying everyone not to work. Part of our system is that sometimes one has to hit an ugly wall (which I’ve done) and sometimes the results aren’t pleasant. Remember that during the Great Depression entire families had to move in together into small dwellings where it was commonplace to live with your uncle, aunt, cousins, grandparents and a couple friends. Anyone who’s ever looked at the Census data from that era will know what I’m talking about.

So while I sympathize I also think reality bears some adherence here. If we’re being honest we have to admit that continually extending benefits has no merit as a solution to the current problem.

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