Are We Subsidizing Unemployment?

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The Dole: The stimulus plan may have actually worsened unemployment. New data suggest a large share of those without jobs remain on the sideline because of increasingly generous jobless benefits.

The same day the White House cut a deal for 13 additional months of unemployment aid, the Labor Department released data showing that more than 3 million jobs are going unfilled. These are jobs employers are actively trying to fill, not just slots they're leaving open until business improves.

Why are so many jobs going begging when so many Americans are begging for jobs? Because many don't have to take them — thanks in part to 99 weeks and counting of unemployment benefits.

Add to that record food stamp payments and other welfare, and the unemployed have been perversely incentivized to keep holding out for better jobs, rather than take less-than-desirable or lower-paying ones. Until their benefits start running out, many long-term unemployed are in no rush to take another job. They can pass on offers requiring long commutes or relocation.

The latest job vacancy numbers bear this out.

At the end of October, there were 3.4 million job openings — a 12% increase from September and a 32% jump from a year earlier.

Since the recession's end in July 2009, openings have soared 44%. This defies previous post-recession trends. Normally the job vacancy rate goes down after a recession, as the job market stabilizes. But millions of jobs are going unfilled now — especially in heavily unionized industries, such as manufacturing, education and health care.

Since President Obama's stimulus extended federal jobless benefits, and bribed states to do the same, the median duration of unemployment has nearly tripled, hitting 26 weeks this summer.

Fully a third of full-time workers have been unemployed for 52 weeks or more, while 47% of jobless Americans have been out of work for at least 27 weeks — the highest since the government began keeping records in the 1940s.

Studies show extending jobless benefits — which now pay people 50% to 60% of their previous wage to stay home for two years — just ends up subsidizing more unemployment.

"When you subsidize something, you get more of it," Cato Institute economist Alan Reynolds observes.

Bruce Meyer of the University of Chicago and Lawrence Katz of Harvard found that "a one-week increase in potential benefit duration increases the average duration of the unemployment spells by 0.16 to 0.20 weeks."

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Posted By: UE76(5) on 12/9/2010 | 1:19 AM ET

Of course "we are subsidizing unemployment". I have been off work for about 76 weeks. The plant that i worked at has hired hundreds of people during this time--but as temp workers. I have went through trade school for a couple years, and then college for a couple years, and worked for this same plant for 21 years and 10 months. And i dont know who wrote this above article, but i can say that i have a phone---and any time i am called back to work i am here waiting !!!

Posted By: jack nunes(655) on 12/8/2010 | 11:38 PM ET

If you are still unemployed after 99 weeks, you and your skills are no longer needed. When no one wanted buggy whips, the buggy whip makers retrained. Get over it!

Posted By: ArizonaKen(210) on 12/8/2010 | 11:30 PM ET

This article seems close to spot on! Not too long ago we called it unemployment insurance, now we call it a benefit, think about what the difference means. Retrain, reduce your life syle, make the adjustments as needed. It is hell right now and we need to ask, why are our jobs leaving, phony answers only prolong the pain. Too many govt regs and over the top taxes, not mention the EPA, are choking this country to death.

Posted By: Tosi(5) on 12/8/2010 | 10:41 PM ET

For your info there are more than 15 million unemployed and you say 3 millions maybe low paying jobs like janitorial/farm workers jobs are available, so many unemployed are professionals displace by outsourcing, are you going to accept and move your family to other states just to accept a low paying job that is not even enought to feed your family. Sometimes you people are educated and it is difficult to think that you dont know what you are talking about...

Posted By: niteski(1635) on 12/8/2010 | 8:40 PM ET

Extend the benefits, but get them to do something for it. Help at schools, public facilities, litter pickup, painting, assisting, and being productive, while maybe teaching them new skills. Compete with Union employees and let them do a better job for less. Scare the living daylights out of the public unions.


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