The recent budget deal between the Republicans and Democrats left an important piece of business unfinished, that being unemployment insurance. Workers are given 47 weeks of federally funded unemployment benefits after they have exceeded the maximum of what their state allows them, which is usually 26 weeks of unemployment benefits.
For the most part Republicans object to the cost of the unemployment benefit extension, which is estimated around 25 billion over the next two years. Senator Rand Paul said that unemployment benefits causes workers "to become part of this perpetual unemployed group in our economy" and that it "actually does a disservice to the people you are trying to help."
Others argue that unemployment benefits are positive because they help boost aggregate demand. The Congressional Budget Office found that the extension of unemployment benefits would boost GDP by 0.2% by the end of 2014 and would increase full-time employment by 200,000 workers.
President Obama has proposed several policies that are aimed at reducing long term unemployment. One of his ideas would be to set up a National Infrastructure Bank and spend 40 billion on deferred maintenance repairs. The president also proposed the Community College to Career Fund Act, this act would award grants to educational institutions and state and local governments for having better job training programs. Congress has yet to approve any of the policies that the president has proposed concerning long term unemployment.
http://www.economist.com/news/united-states/21592624-can-american-labour-policies-face-challenge-long-term-joblessness-long-time-gone
Before I say anything, I want to let it be known that this is merely an opinion and I have no intention of offending anyone with it. Just a few comments. First, I would like to say that quite obviously this unemployment insurance has its pros and cons like you said. I don't exactly define myself as a republican, however in terms of this argument I am certainly leaning towards that side. Sure, in the grand scheme of things 25 billion dollars isn't a TON of money when held up against the several trillion dollar debt the US is in, but I believe that it would be a "waste of money" to do such a thing. Why reward people for not having a job? Wouldn't this create a lack of motivation amongst this vast group of people? Of course, many of these people may have been laid off, but to aggressively go after a job all starts from ones motivation. One more thing. It is obviously great that President Obama is aiming his sights at this, because it truly is a problem in our society. However, how do we know that these training programs are going to make a significant difference. I really don't know much about this stuff, but those are my viewpoints.
ReplyDeleteIt is not necessarily a "waste of money" to extend unemployment benefits. During times when the economy is slow, it is common fiscal policy to increase government spending that will boost the economy. Our economy is still recovering from a recession, and it is important to ensure that it grows safely until the private industry can invest more into our economy itself. When the government spends on programs like unemployment benefits, that money will ultimately be spent back into the economy through necessary purchases such as rent and food. Those additional purchases can encourage employers to hire more. Additionally, a good number of people who receive unemployment benefits are not really being rewarded for not having a job. This type of government investment is what keeps people from falling below the poverty line, and ultimately, gives them the necessary resources to focus their attention on gaining employment rather than pure survival. As an example, the US Department of Labor released a report on the impact of unemployment insurance for the last 1 to 5 years. It reported that 3.2 million people did not go underneath the poverty line due to the benefits of unemployment benefits in 2010, GDP increased by 0.8% with an additional 800,000 jobs added to the economy in 2010, and if we increased unemployment benefits for 2014, we could see an additional 500,000 jobs added. Here is the report: http://www.dol.gov/dol/maps/euc/euc.htm
DeleteI'm going to have to agree with Luke here. While $25 billion is a small fraction of our national debt, it is still beneficial to save money where you can. It certainly isn't true for all people on unemployment benefits, but often times they will coincidentally "find" their jobs in the last weeks of their payment. I feel that for the most part the unemployed persons that are actively looking for a job should be able to do so in the shortened amount of time.
DeleteIn response to President Obama considering the Community College Career Fund Act, I am hesitant. Better job training would help some people find jobs, but increasing funding to these programs across the country could be enormously expensive. Some professions may cost more to educate than they could pump back into the economy, and it may not help the economy recover in the long run. Also, more qualified people in the workforce may make it increasingly difficult to land a job. This is just speculation, but it may want to be considered.
The government has been very considerate for giving such a long unemployment compensation. I agree with everybody's opinions. I think that 73 weeks is a little too much and there are chances that people might slack off in finding jobs. But there are certain kinds of jobs whose availability is very low. I think the government should also encourage savings through investment. Some of you'll might not agree as you'll believe that consumerism drives the economy. But if people wont save then government will have to spend additionally which will definitely increase the trillion dollar debt. Federal government should decide the additional compensation based on the level of job availability in the market. I do agree that the government spending on the unemployed people might lead to an increase in taxes. Which is an example of giving somebody's earnings to someone else to spend.But the money spent on unemployment compensation will be spent again on businesses which will lead the same taxpayers and government to earn it back.
ReplyDeleteMatt, you commented that the government can use expansionary fiscal policy by increasing spending to grow the economy safely until the private industry can invest more into our economy itself. While that is certainly one theory, I would argue (and inferring from their comments I'd bet Brooks and Luke would agree) that a reduction in the corporate tax rate would be a better expansionary fiscal policy because it directly and positively impacts the private sector.
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