Currently, Republicans and Democrats are deciding whether or not to extend the unemployment benefits that ended on December 28th. During recessions the government extended benefits for the unemployed to 47 weeks of federally funded benefits, extending from the original 26 weeks. After the extension ended, it left about 1.3million Americans without benefits.
Republicans are initially against extending benefits again because of the high cost of around $25 billion over the past two years. Rand Paul, a republican senator from Kentucky argues that the increased benefits give an excuse to the unemployed, keeping them unemployed longer. He backs up this point with the fact that unemployment actually grew with the extension of benefits in place. Others are opposed to the extension of benefits as well because they feel as though it will not help decrease unemployment rates.
Some, however, argue that employment benefits simulate consumer growth and boost aggregate demand. They say that cutting benefits would essentially cut jobs because of the boost in consumer growth and spending caused by the benefits.
Research has shown that typically, those unemployed for six months or more, unemployment rate rises. Also, they found that inexperienced workers, or those that were new to unemployment were much more likely to get called back to a job than those that were unemployed for six months or longer.
Obama has a few ideas to address the unemployment problem. His first idea being, setting up a National Infrastructure Bank where they would spend $40 billion on maintenance things. Another idea being establishing the Community College Career Fund Act, where colleges and programs would be awarded grants for better career preparation courses. However, Congress has yet to approve either of his ideas.
There is not much hope yet for America's unemployment problem. So, currently, Congress begins the year debating the issue of unemployment benefits.
Website URL: http://www.economist.com/news/united-states/21592624-can-american-labour-policies-face-challenge-long-term-joblessness-long-time-gone
I think that better training programs from employers and wage subsidies for displaced workers could be a step in the right direction to a solution to this problem.
ReplyDelete"But the biggest obstacle faced by the long-term unemployed may well be unemployment itself—a pattern known as “scarring”, where persistent unemployment itself stops them being rehired."
ReplyDeleteI think that this is the core of the issue. This long-term unemployment is something that is prolonged and discourages workers. This article displays an example of discussions in class that we had concerning unemployment and it is interesting to see these ideas played out in real life.
"There remain roughly three applicants for every open job."
ReplyDeleteI believe that this is one of the major problems with the issue of unemployment. While there would only be temporary growth, it would be more beneficial to place government investments in infrastructure. This would create jobs and from this would increase AD. From the Neoclassical approach it is through the production of jobs that would increase the production which would be followed by the purchasing of these created products.