In an article in the NY Times the issue on whether the unemployment benefits period should be increased under President Obama’s Jobs bill was under scrutiny. The article provided input from several members of the working force who have been unemployed for extended periods of time and felt that the unemployment benefits period should not be increased. Some of these people even refused to apply for the benefits saying that it was like an incentive to not look for work.
As we progress through the material in this NIBC course we have encountered the issue of unemployment. Though we know that the intentions of the President are to help the unemployed he at the same time may be hurting them. This extension of the benefits period may increase frictional unemployment as people may be less willing to look for new jobs given they have some source of funding for their survival and also people may also extend gain from these benefits by not accepting job offers immediately. However, some have argued that the actual increase in unemployment that this extension of benefits has is quite small. They say this because extension on benefits can only be received if the recipient is actively looking for a job.
This is an interesting topic, but evidently very hard to address. First, how is it possible to distinguish whether a person is actually actively looking for a job or not? Second, I feel that different people would have different views on this issue, subject to their education and income levels. For example, an unemployed person with significant education could decide to not look for employment, either because of his past savings or because he just feels he could get a better job in future. As in his short term security could discourage him from looking for a job actively.
ReplyDeleteWhile extending unemployment benefits would be beneficial in the short term in the long term this article is right. We have to focus on improving total factor productivity and increasing the rate of job finding. This means more infrastructure spending and increased funding for job retraining programs.
ReplyDeleteI think the central issue here is that, although most people agree that extending the benefits does keep a percentage of people unemployed for longer, in the current economic climate, many people who have been actively searching for jobs, and applying to some that they are vastly overqualified for, cannot find work. I think the important point, which was mentioned several times in the article, is that the money being spent on keeping unemployment benefits going for so long could be better spent. Providing tax incentives for companies to hire more workers, or providing job retraining for the unemployed would both be better ways to spend the money.
ReplyDeleteThis topic is closely related to what we learn on textbook. But what in realty is always more complicated.
ReplyDeleteI think Obama's call for extending unemployment benefits, except for simply relieving jobless people in such a economic situation, also has its political target. Unemployment is the hottese topic in election, most voters will appreciate the direct benefit policy rather than thinking about the deep economic influence in it.
Thie policy, I think is at least NOT benefitial for US's economy, since Increasing more jobless benefit means more tax is used on benefits instead of on investment. With the serious deficit, US government does need to think more about it.
It's also important not to forget the abusive behavior within the system. I don't believe extended benefits negatively affects the unemployed in middle class as the amount given isn't nearly enough to fulfill the usual spending habits, and as savings drain away it increases pressure to find new work. But when it comes to the already poor and people willing to do day labor for contractors. These guys can ride out receiving the benefits but then receive extra non taxed income.
ReplyDeleteIt's also important not to forget the abusive behavior within the system. I don't believe extended benefits negatively affects the unemployed in middle class as the amount given isn't nearly enough to fulfill the usual spending habits, and as savings drain away it increases pressure to find new work. But when it comes to the already poor and people willing to do day labor for contractors. These guys can ride out receiving the benefits but then receive extra non taxed income.
ReplyDeleteThis article points out that it is believed that unemployment benefits extend the amount of time people are out of work. This is true, meaning that extending the length of unemployment benefits increases the amount of people who are long term unemployed. However, it also says that is has been found that this effect is smaller during bad economic times. This is very interesting but makes sense. Since less people are receiving job offers (and they are receiving less of them) people would be more likely to accept a job offer, irregardless of unemployment benefits since they are not sure when and if they will receive another one. While extending unemployment benefits may increase long term unemployment, it may not increase it by as much as those who are opposed to it say.
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