“Pull Harder On Your Bootstraps!”: Excuses, Excuses, For Not Extending Unemployment Insurance
The president on Tuesday called on Congress to extend jobless benefits for the long-term unemployed, saying the insurance program keeps Americans from “falling off a cliff.” But the Republican leadership — convinced that Americans can pull themselves up and out of the ravine by their bootstraps — finds the extension unnecessary.
“Pull harder!” sounds kind of callous, though, especially since the unemployment rate hovers above 7 percent and there are more people looking for work than positions available. So Republicans are finding nicer ways of explaining their objections, and ginning up excuses.
The Washington Post reported yesterday that the Republican leadership sent a “what we talk about when we talk about cutting benefits”-type memo to the rank-and-file, which emphasizes the need for compassion. “For every American out of work, it’s a personal crisis for them and their family,” the memo states. “That’s why House Republicans remain focused on creating jobs and growing the economy.”
Is job creation incompatible with extending unemployment insurance? The memo suggests it is: “Even the non-partisan Congressional Budget Office has found that extending the program will lead to some workers reducing the intensity of their job search and staying unemployed longer.”
By the way, the C.B.O. also estimated in December that “extending unemployment benefits would raise gross domestic product (GDP) and employment in 2014 relative to what would occur under current law.” No mention of that in the memo.
Republicans are also trying to make themselves look better by insisting they’d agree to an extension if the cost were “offset” with cuts to the federal budget. Raising revenue by closing tax loopholes is, naturally, off the table. And what’s on the table, at least so far, is definitely not kosher for Democrats.
Senator Mitch McConnell, the minority leader, suggested paying for the cost of an extension by “lifting the burden of Obamacare’s individual mandate for one year.” It’s true that would save money — according to the C.B.O. — but only because fewer uninsured people would seek and receive Medicaid coverage.
By: Juliet Lapidos, Editor’s Blog, The New York Times, January 8, 2014
“Right-Wing Unemployment Myths Debunked”: When You Look At The Data, It’s Just Not There
Surprising many supporters, a three-month unemployment extension bill survived an initial Senate test Tuesday, with six Republicans joining 37 Democrats in voting to let the bill proceed to debate. But GOP members in both chambers have suggested they’ll withhold or withdraw their support unless Democrats offer up conservative concessions – be they parallel budget cuts, deregulation measures, new requirements for the unemployed or an Obamacare mandate delay. Others have argued that unemployed people would be better off without unemployment benefits.
In a Sunday CNN interview, Wisconsin governor and potential presidential contender Scott Walker argued that “the federal government doesn’t require a lot” of the unemployed, and urged that rather than “just putting a check out,” Congress tie unemployment extension to tightened eligibility requirements.
“Making them jump through more hoops will definitely increase administrative costs, but it’s not going to generate more jobs,” Economic Policy Institute economist Heidi Shierholz countered in a Tuesday interview with Salon. “Unless he’s looking at it as a jobs program to hire more public sector workers.”
Shierholz, a former University of Toronto professor now at the progressive Economic Policy Institute, panned several of the right’s other diagnoses and prognoses for the unemployed. A condensed and edited version of our conversation follows.
Some of the same Republican senators whose votes were necessary for unemployment extension to move forward Tuesday are implying they could still vote against final cloture if it isn’t offset with cuts. Is insisting on budget cuts to “offset” the cost of unemployment extension good policy?
It isn’t in this context. And I say that sort of carefully. Because if we were at full employment, and the economy was humming along, and fully utilizing all its potential, then if you’re going to spend a big chunk of money, you might want to think about offsetting it, because the economy doesn’t need any more demand.
We are so far away from that situation that this is exactly the kind of time where you do not have to worry about trying to do offsets like that.
It’s not a bug of the UI system, it’s a feature that it actually costs money. Because at a time like this, when the labor market is so weak, the economy is so weak, and we know that the overwhelming factor behind that weakness is just weak demand, we’re operating way below our potential. People don’t have the income, so they’re not spending. Businesses aren’t investing as much as they would if we were in a strong labor market. Weak demand for goods and services means businesses don’t have to ramp up hiring, they don’t have to ramp up to meet the demand, because demand isn’t there.
So the fact that you’re spending this money on UI, you’re getting money into the economy, is actually exactly what we want to do at a time like this. So trying to sort of bend over backwards to offset it actually just undermines one of the key features of extending UI, which is that it increases economic activity at a time when the economy desperately needs it.
Scott Walker told CNN that “one of the biggest challenges people have who are either unemployed or underemployed is many of them don’t have the skills in advanced manufacturing, in healthcare and I.T. where many of those job openings are.” What’s your assessment of that claim?
You hear that claim made a lot: that the reason we have this weak unemployment, or high long-term unemployment, is that workers don’t have the right skills for the jobs that are available.
I think because you hear this anecdote a lot, there’s been a ton of research done on it — a ton. And economists have dug in, and looked at the data from all sides. The overwhelming consensus: People who aren’t just relying on anecdotes, but who are actually digging in and looking for any sign of a skills-mismatch in the data, don’t find it. The divide on who finds this is more those who are relying on anecdotes versus those who have looked at the data, not right-leaning or left-leaning. Because of those who have looked at the data, you just don’t find evidence that the problem right now is due to workers not having the right skills.
If it were due to workers not having the right skills you would have to see some evidence in some meaningfully sized group of workers of actually tight labor markets relative to 2007. [But] unemployment rates are higher now relative to before the recession started across every education group, across every gender, across every age group, across all racial and ethnic categories, in all major occupations, and all major industries.
If we were seeing tight labor markets, you’d see wages being bid up for the workers who can’t be found, people poaching from other companies. And that you also don’t find. You actually find basically no group that is even seeing wage growth keep pace with overall productivity growth. In any group meaningfully sized enough to be actually driving anything, you don’t see any sign of wages being driven up. Same story with hours.
You’re not seeing any sectors of meaningful size where there’s more job openings than people actually looking for those jobs.
You hear anecdotes a lot about people saying, “I just can’t find the workers that I need.” This may be some interesting sort of psychological stuff about the echo chamber of how those things get so much play at a time like this. When you look at the data, it’s just not there.
One of the senators who voted against proceeding with the unemployment bill, Jeff Sessions of Alabama, said, “First and foremost, unemployment insurance is treating the symptoms of the problem. It’s an aspirin for a fever, but the fever has been raging for weeks now.” Is that a revealing analogy in any way?
It’s treating the symptoms and it helps actually be part of the cure.
They actually are a lifeline to the people that were most hurt by the downturn — people who lost their jobs through no fault of their own, and have not been able to find another one in the period of weakest labor market we’ve seen in 70 years. The fact of the matter is that the labor market is still extraordinarily weak. It’s way weaker by far than at any time we’ve ever allowed extensions to expire.
So it definitely is part of dealing with the symptoms. And then it is absolutely part of the cure: You get money in the hands of the long-term unemployed.
Those are people who are almost by definition cash-strapped. They are going to spend that money. It goes straight into the economy and generates demand for goods and services, which generates demand for workers. So it helps strengthen the recovery.
You put out an estimate that not extending unemployment benefits would cost 310,000 jobs this year. How?
Around $25 billion would be spent if the extensions were continued [for a year]. Some spending is actually more stimulative to the economy, and it has everything to do with how fast and how completely that money goes into raising and creating demand. So unemployment benefits are consistently the second most efficient way that a government can spend money — either through direct spending or through tax cuts to support an economy, to generate economic activity. The only thing that consistently comes in ahead is food stamps.
You have that [unemployment] money spent on rent and groceries and clothes. So you increase demand for goods and services. Then there’s the fiscal multiplier. Then from there, that’s where you get the total amount of economic activity generated — the boost to GDP. And then from there, there’s a direct walk to jobs created.
It’s a rough measure. But that’s an idea of the scope.
Scott Walker also argued that instead of “just putting a check out,” the government should require more from people on unemployment, in terms of entering job training and looking more often for work. What do you make of that argument?
We do know that it’s already keeping people in the labor market, looking for work. There’s good evidence that receiving benefits actually keeps people looking for work.
A helpful bit of information, to know if the reason people are long-term unemployed is because they’re not looking hard enough, is the following: You’d want to know if our long-term unemployment situation is somehow weird, if it’s unexpected, if there’s something going on with our long-term unemployed, like they’re not looking as hard as they should, or they’re not being as flexible as they should. Like, is there something about these benefits that’s keeping them from doing those things? And that you don’t find.
So there’s a paper by Jesse Rothstein that looks very carefully at today’s long-term unemployment situation in the historical context. And he found that what we’re experiencing now is exactly what you would expect given three things: given how deep the period of economic weakness has been; how long it’s been as bad as it’s been; and then a little bit of this longer-term trend in long-term unemployment share. Which has to do with declining incidences of temporary layoff and stuff like that — but that’s not a big component.
We’re not seeing something abnormal right now in the long-term unemployment situation, except for an incredibly abnormally weak labor market that’s been incredibly abnormally weak for a very long time. Once you have that, then what’s going on with long-term unemployment is exactly what you would expect.
So it’s not like, “if we just get them to look harder, they’re going to find jobs.” The real problem, why we have this long-term unemployment crisis, is that the labor market has been so weak for so long.
So making them jump through more hoops will definitely increase administrative costs, but it’s not going to generate more jobs. Unless he’s looking at it as a jobs program to hire more public sector workers to deal with more administration. But I don’t think that was probably his angle. The real problem right now is weak demand for workers, and this won’t touch that.
The reason we have elevated unemployment is not that workers don’t have the right skills for the jobs that are available. It’s just that we don’t have jobs available. It’s not like training can never help an individual, but that’s not why we have high unemployment right now.
By: Josh Eidelson, Salon, January 8, 2014
“The Social Justice Majority”: We Are Far More United Than Our Politics Permit Us To Be
Why are we arguing about issues that were settled decades ago? Why, for example, is it so hard to extend unemployment insurance at a time when the jobless rate nationally is still at 7 percent and higher than that in 21 states ?
As the Senate votes this week on help for the unemployed, Democrats will be scrambling to win support from the handful of Republicans they’ll need to get the required 60 votes. The GOP-led House, in the meantime, shows no signs of moving on the matter.
It hasn’t always been like this. It was not some socialist but a president named George W. Bush who declared: “These Americans rely on their unemployment benefits to pay for the mortgage or rent, food and other critical bills. They need our assistance in these difficult times, and we cannot let them down.”
Bush spoke those words, as Jason Sattler of the National Memo noted, in December 2002, when the unemployment rate was a full point lower than it is today.
Similarly, raising the minimum wage wasn’t always so complicated. The parties had their differences, but a solid block of Republicans once saw regular increases as a just way of spreading the benefits of economic growth.
The contention over unemployment insurance and the minimum wage reflects the larger problem in American politics. Rather than discussing what we need to do to secure our future, we are spending most of our energy re-litigating the past.
A substantial part of the conservative movement is now determined to blow up the national consensus that has prevailed since the Progressive and New Deal eras. The consensus envisions a capitalist economy tempered by government intervention to reduce inequities and soften the cruelties that the normal workings of the market can sometimes inflict.
This bipartisan understanding meant that conservatives such as Bush fully accepted that it was shameful to allow fellow citizens who had done nothing wrong to suffer because they had been temporarily overwhelmed by economic forces beyond their control.
The current debate is flawed for another reason: It persistently exaggerates how divided we are. Of course there are vast cultural differences across our nation. It’s not just a cliche that the worldview of a white evangelical Christian in Mississippi is quite distant from the outlook of a secularist on Manhattan’s Upper West Side. African Americans, Latinos, Asians and whites can offer rather diverse interpretations of the meaning of our national story.
But on core questions involving social justice, we are far more united than our politics permit us to be. A survey released at the end of December by Hart Research, a Democratic polling firm, found that Americans supported extending unemployment insurance by a margin of 55 percent to 34 percent. Several recent surveys, including a Fox News poll, found that about two-thirds of Americans support an increase in the minimum wage.
This leads to two conclusions. The first is that most Americans broadly accept the New Deal consensus. We may disagree about this or that regulation or spending program. We may squabble over exactly how our approaches to policy should be updated for a new century. But there is far more agreement among the American people than there is among Washington lobbies, members of Congress or political commentators on the core proposition that government should help us through rough patches and guarantee a certain level of economic fairness.
The second conclusion is that we have to stop letting the politics of culture wars so dominate our thinking that we forget how much we share when it comes to life’s day-to-day struggles and what we can do to ease them. Disputes over personal morals and lifestyle choices may get more page views or rating points, but they do little to improve anyone’s standard of living.
The minimum-wage increase is typically labeled a “liberal” idea. Yet many grass-roots Republicans see respect for those who work hard as rooted in sound conservative principles demanding decent compensation for a day’s labor. An evangelical might see fair pay as a biblical imperative while a secularist might view the question through a more worldly philosophical prism. Nonetheless, their distinctive reasoning processes lead them to the same place.
President Obama’s old line challenging the idea of red and blue Americas unalterably opposed to each other seems terribly outdated or naive. Electorally, at least, those divisions are still painfully obvious. But on matters of economic justice, we shouldn’t let a defective political system distract us from what we have in common.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, January 5, 2014
“An Intellectual Hollowness”: Why Republicans Have No Ideas About Mass Unemployment
Last Saturday, the extension of unemployment benefits originally passed at the outset of the economic crisis expired. The position of Democrats in Washington, backed by a growing mountain of economic research, is that macroeconomic and humanitarian considerations alike both argue for an extension of unemployment benefits.
The position of Republicans in Washington is rather strange — less a moral or economic argument than an expression of indifference. “These have been extraordinary extensions, and the Republican position all along has been ‘we need to go back to normal here at some point,'” argues Representative Tom Cole. “[W]hat we did was never intended to be permanent. It was intended to be a very temporary solution to a very temporary crisis,” echoes Representative Rob Woodall. Of course nobody intended for the crisis of mass unemployment to last five years. Nobody intended for the crisis to happen at all. It is simply weird to argue that, since the problem has gone on longer than intended, the response to the problem must end as well. The fire trucks don’t shut off the hoses simply because the fire should have been put out by now.
Yet the weirdness, far from being random, reveals something deeper at work. The most obvious thing, of course, is a general lack of concern for the fate of the unemployed — or, at least, a casual assumption that the unemployed themselves must be to blame for their plight. But even a more generous reading of the Republican position, taking its most serious defenses at face value, reveals an intellectual hollowness. Half a decade into the economic crisis, the Republican Party has no serious ideas about the Great Recession.
One of the few Republicans to directly defend his party’s refusal to extend unemployment benefits is Rand Paul. Unfortunately, as is so often the case, Paul’s ideas about unemployment insurance are cracked. Paul has repeatedly cited studies that show that employers discriminate against job candidates who have been out of work a long time. Paul simply assumes that people are staying unemployed so they can continue collecting unemployment benefits. But the economics paper Paul cites, according to the economist who wrote it, suggests the opposite of his conclusion.
Meanwhile, The Wall Street Journal editorial page gamely defends the Republican stance:
The Administration claims that every $1 of jobless benefits creates $1.80 in economic growth, based on the notorious “multiplier” in Keynesian economic models. This is the theory that you can increase employment by paying more people not to work, and that you can take money out of the private economy by taxes or borrowing without cost.
The argument here is that there’s a “cost” to “taking money out of the economy” to pay for unemployment benefits. What is that cost? Well, in normal conditions, higher deficit spending will cause interest rates to rise. But these are not normal conditions. Interests rates are as low as they can be. The zero bound is the policy dilemma of the moment. The Journal editorial page has been warning for years that rising interest rates are on their way, or already occurring. The utter failure of these predictions has not even slightly dented its jaunty confidence.
It is true that some research has shown that cutting off unemployment benefits can force the unemployed to search more aggressively (or desperately) for work — say, an out-of-work machinist might take a job for lower wages at the 7-11. But those studies all take place in the context of a normal economic cycle, not the mass unemployment we see today. The conditions of mass unemployment from the Great Recession dictate that cutting off benefits from the unemployed simply immiserates them because there are no jobs.
Republicans in North Carolina proactively demonstrated their party’s stance by cutting off benefits to the unemployed before it was tried elsewhere in the nation. The result was dismal: The state’s labor force is shrinking. Rather than getting jobs, the unemployed have simply stopped looking for them, because they don’t exist.
Sharp conservative ideas about the recession can be found on the margins of the political debate. (See, for instance, Michael Strain in the Weekly Standard.) It’s certainly possible to reconcile conservative doctrine about the size of government with specific plans to address mass unemployment. But Republicans in Congress have not bothered to adopt any of these alternative proposals. Nor have conservatives in general displayed much of an interest in the topic of unemployment benefits. There’s an asymmetry of partisan interest on the subject somewhat akin to Benghazi, which obsesses the right and bores the left. Republican thought on mass unemployment is a restaurant with tiny portions that taste terrible.
This is not to say that the GOP lacks any ideas about economic policy. Both parties have fairly well-defined ideas about the general role of taxes, spending, and regulation. The difference is that the Democratic Party also has a policy agenda that is specifically related to the special conditions of high unemployment and low interest rates. The Republicans are still merely asserting that their normal agenda applies just as well now as ever. The unique, dire conditions of the Great Recession shouldn’t be expected to undo all the party’s program, or to alter its general long-term ideas. (Democrats have not, and should not, given up their preference for universal health insurance, reduced greenhouse gas emissions, and so on, nor should Republicans have to abandon their preference for the opposite.) What they lack is any legislative response to the economic crisis. They just want to get back to normal, and since normality has not arrived, they’d just as soon pretend it has.
By: Jonathan Chait, New York Magazine, December 31, 2013
“Bad News For The Jobless And America”: How Our Economy Lost $400 Million In One Week Alone
Long-term unemployment benefits expired on December 28, meaning an absence of checks this week for more than 1 million jobless Americans. That’s bad news for them, of course—but also the rest of us. According to a new analysis from the minority staff of the House Ways and Means Committee released Friday, $400 million was drained from state economies this week alone thanks to the lapse.
Unemployment benefits are one of the more effective forms of stimulus because the money is badly needed and thus spent right away. The Congressional Budget Office says 200,000 jobs will be lost this year if the benefits are not restored, and this week the damage began.
Big states were obviously the hardest hit, naturally: nearly $65 million came out of the California economy in one week alone, according to the analysis. And of course, states represented by Republicans who oppose the extension each suffered some economic harm. Senator John Cornyn twice blocked a vote on an unemployment insurance extension before the holiday recess, and his home state of Texas lost $21.8 million this week.
Yet Republicans, so far, have not expressed any desire to extend the benefits. “Every week that Republicans fail to act tens of thousands of additional long-term unemployed Americans lose this vital lifeline as they look to get back on their feet after the worst recession in generations, and the economy in each state is taking a hit,” said Representative Sander Levin, the ranking member on Ways and Means.
Senator Harry Reid has promised a vote early next week on a bill by Senators Jack Reed and Dean Heller to extend the benefits for three months, with no offsetting spending cut, so that a longer-term bill can be worked out. But Heller is the only known Senate GOP sponsor to date, and House Speaker John Boehner has said he doesn’t want any bill without a pay-for attached.
If that bill fails, Democrats have a couple options this month: an extension of benefits could perhaps be folded into either the farm bill, which is in conference negotiations, or into the several omnibus spending bills that need to be finalized soon. In those latter two cases, Republicans would no doubt extract some sort of price from Democrats for extended benefits, but perhaps a solution is still possible.
But, again, Republicans seem to have other plans. House majority leader Eric Cantor announced Thursday his plans for the new year: yet another vote to modify Obamacare, this time adding new security requirements to the health insurance exchanges. The White House has said there is no danger of breaches, and some observers, like Steve Benen, think Cantor’s bill is simply a ploy to scare people away from the exchanges.
In any case, while Cantor fiddles around with his messaging bill on Obamacare (which will never be signed into law), his home state of Virginia lost $2.8 million in economic activity this week, as 9,700 people lost benefits. That’s going to be hard to justify as time goes on, both for Cantor and his colleagues.
By: George Zornick, The Nation, January 3, 2014
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