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Paul Sancya / AP Photo Neither Democrats nor Republicans want to admit it, but it's becoming easier to live on unemployment than ever. Reihan Salam on why a spike in two-income families and a surge of federal support is skewing the numbers.
Even after a strong jobs report in March, the unemployment rate has remained stuck at 9.7 percent. And as a new study from the Pew Fiscal Analysis Initiative has found, 44 percent of unemployed Americans have been unemployed for at least six months. During the devastating recession of the early 1980s, in contrast, the long-term unemployed were only 26 percent of the total. Remarkably, the number of unemployed Americans who've been out of work for a year or longer is 23 percent. Naturally, Republicans will try to lay the blame for staggeringly high levels of unemployment on the White House. Democrats will argue that various stimulus efforts, from cash for clunkers to aid to states, kept the unemployment picture from getting much worse. But both parties ignore the obvious and politically inconvenient truth: unemployment is higher in no small part because unemployment is more pleasant than it used to be.
Is it the president's fault that Americans are better off than they were 30 years ago, and are thus not desperate to take whatever job that comes along?
For most of us, particularly those of us who've either endured or seen a loved one endure a spell of unemployment, the idea that joblessness is some kind of walk in the park seems faintly perverse if not completely infuriating. But without trivializing the psychic trauma involved, there's no getting around the fact that it is in many respects much easier to be unemployed now than it was in the Reagan-Volcker era. And if that's true, "blaming" President Obama for a high unemployment rate seems faintly absurd. Is it the president's fault that Americans are better off than they were 30 years ago, and are thus not desperate to take whatever job that comes along?
In 2010, there are far more two-earner households than there were in 1981, which means that many households now have an added economic cushion to help withstand the impact of a job loss. As labor economist Stephen Rose has noted, a husband-and-wife couple between the age of 25 and 62 has a median income of $70,000. If both spouses work at least part of the time, the median income goes to $81,000, an amount that allows for a comfortable standard of living in most U.S. metropolitan areas. An income shock that cuts that number in half or two-thirds would represent a significant blow to a family's economic prospects. But it's a far less serious blow than an income shock that cut the number down to zero.
Moreover, the welfare state is far more generous. Between 1981 and 2007, per capita spending on the federal welfare state increased by 77 percent, adjusted for inflation. Unemployment insurance has grown more generous. Over the last five years, the Pew study notes that unemployment insurance spending has gone from $33 billion to $168 billion. Half of that $168 billion in FY 2010 has gone to the long-term unemployed. This further helps cushion the blow, and it can allow an unemployed person to be somewhat choosier about her next job. While it's certainly true that many workers have taken jobs that involve huge salary cuts, many others are holding out hope for a job that matches expectations in a sunnier labor market. This isn't necessarily a bad thing for society. One can imagine workers using an extended spell of unemployment as an opportunity to gain new skills and to spend time with loved ones.
Simply put, unemployment benefits increase unemployment durations. There is some controversy as to why this is true, but there's no getting around it. According to Michael Feroli, an economist at JP Morgan Chase, the extension of unemployment benefits has increased the measured unemployment rate by 1.5 percent.
To be sure, many economists, including well-regarded Harvard labor economist Lawrence Katz, believe that the scarcity of jobs is so severe that the incentive problem posed by extending unemployment benefits is outweighed by the quick fiscal stimulus it provides. The implicit view is that low demand is the most pressing problem faced by the economy, and not low supply.
Casey Mulligan, a University of Chicago economist with a contrarian bent, has argued that U.S. economic woes stem from a supply problem and not a demand problem. That is, when people have good alternatives to working, they'll take them and in the process lower overall output. In a highly entertaining series of posts, Mulligan keeps a long-running list of employment-reducing policies that the Obama and Bush administrations have embraced, including a wide range of means-tested programs for student loans, mortgages, and health insurance premiums, minimum wage increases, and tax increases. The means-testing of social programs essentially raises marginal taxes on poor families as they climb the economic ladder: the more you earn, the more benefits you lose. If a married couple is getting a big break on mortgage payments only if its income falls below a certain level, there is a strong incentive to keep a potential second earner in reserve.
While Mulligan's perspective fingers government as a major culprit in persistently high unemployment rates, you won't hear Republican candidates enthusiastically embracing his ideas, not least because many of the policies on his list are popular. Rather than focus on the damage done by means-tested student loan modification and mortgage modification, they will most likely focus on the threat of higher taxes. We're thus as far as ever from an honest debate about unemployment.
Reihan Salam is a policy advisor at e21 and a fellow at the New America Foundation.
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Unemployment sucks. The government, if they are to do anything at all, should be helping small growing companies, not behemoths.
Thanks for that hackneyed boilerblate response. Try reading the article instead of regurgitating talking points.
I would, but I went to a public school staffed by the NEA
No incentive? How's losing your home as an incentive? I get $440 a week on unemployment, I used to make $8250 a week. We've lost everything but the clothes on our back and a few keep sakes. Obama focused on his agenda, his place in history while millions of us became history. It's 14 months into his historic administration and we're still waiting for him to something more than put pretty feathers in his hat. Start Treaty my ass. No one in Russia ever had any plan to fire nukes at us. I just wish Obama would do something about the financial nuke that's hit all of us.
john, about the only thing he could do is to start acting like a Republican.
John, you used to make over 400K a year and now after losing your job you claim to have lost everything??? You can easily survive on unemployment benefits, your definition of survival is clearly a little skewed. You sound like you need some help, maybe some glasses so that you can see what is going on around you in the future. And, NO, that is not a reference to the government, it is about the basic knowledge of saving, diversifying, and planning for events. I am sorry that you lost your job because it is never easy, but you need to think before you post.
We seem so determined to become Europeanized, I am sure the term "signing on" will soon become part of our vernacular. As is, "signing on to the dole." England just made it even easier by computerizing signing on. It used to be hard to do it here, although, some, like my cousin have made it an art form for years. Where is former Sen. Jim Talent, the guy who was the brains behind welfare reform when we need him?
I love the irony of how people can rail against the president and hark on fears of government takeover of everything, communism, etc.. while at the same time blame the government for millions of people not having jobs. It is the same old story.....I only want you when it is convenient
This guy is obviously never experience unemployment, so it's easy for him to lay blame on the unemployed. It is a common GOP theory that paying unemployment benefit cause people to be unemployed, as if, like being gay, unemployment is a life style choice. This just show how out of touch GOP is with the reality. But one cannot blame them, because they live in a world that dropping $980 on office liquor, $1000 at Tiffany for office supplies, and $2000 at S&M Club is OK, but god forbid that we pay $100 a week for an unemployed worker to put food on the table for the children. All the self-righteousness, all the chest thumbing are just cruel and disgusting. I have an advanced degree, but was out of work for a year in the early 90s. I know how painful, how demeaning it is. I have $25 in my bank account and a 3 year old daughter that I need to feed. Being unemployed is not just the total devastation of loss of financial means, more horrifying is that you lest a sense of self, and lost the social circle that you came to take for granted. After 6 months, you begin to question yourself, the nagging self-doubt is unbearable. I was fortunate enough to get retained and find a job in different area, but I would never begrudge my tax money go to help those unfortunate people.Mr. Salam, if for nothing else, think of the children. It is not their fault to suffer from shortage of food. This is why I can never vote for GOP, they blame the little crumb that they toss, in disgust , to the little people and give the bankers and fat cats a free pass. You know why? because they shop at the same places, Vermont winery and Tiffany.
to fk4711..... I too ripped Salam a new one for what he said in his thread. If you're interested just scroll down and read what I had to say. However, where you and I part company is when you brand the GOP as the party of Ebenezer Scrooge. I disagree with your assessment, and I would challenge your contempt for Republicans by professing my admiration for the work they do. Sure anyone can feign outrage over a derogatory report of some rumored excess .... but I would point out, you might wanna curb your tongue a little. I gotta tell ya, the DNC has long been associated with spending money like a drunken sailor too. I'm not saying it's something anyone should be proud of....it is however the nature of the political beast, and an entire group should be lambasted cause of the poor judgement of the few.
Oh crap, excuse the typo... It should read as: "and an entire group should not be lambasted ......... "
"I disagree with your assessment, and I would challenge your contempt for Republicans by professing my admiration for the work they do." Oh, Rex, I would love to see a list of the "admirable" things Republicans do. You're kidding, right? Republicans don't have any actual policies that are good for America or Americans. They're nothing but organized crime; they've been bamboozling Americans for years."Limited" government isn't a realistic goal...just a chant of ignorant blowhards. Modern life is too complex and too fraught with exploitative, criminal elements for this country to run on "autopilot." What a joke. Republicans know that. In fact, the only time Republicans are for limited government is when Democrats are in office. The Republicans are the ones "expanding" federal government - to put money in their corporate and military-complex buddies wallets And, 2qithout a strong federal government you can kiss Democracy goodbye (which is what they want) because corporations will be in charge, and we'll be a fascist's state - with no protections for our money or our lives - in a heartbeat. San's a real, working ideology, Republicans are nothing but disrupters of the people's domestic peace and harmony, only in the business of lying, distorting, fear- and hate-mongering, doing whatever it takes to stifle Democracy in America, whatever it takes to pull the wool over the heads of half the people in the country to keep a firm grip on access to the power to shape legislation in favor of the corporatists and keep ALL the money in middle-class wallets flowing into the pockets of this country's elite corporatists. Even Reagan - that idolized paragon of Republicanism - managed the largest transfer of wealth in history - $3 trillion from the middle-class to the ubber rich - and after a decade of his disastrous epoch and another ten years of NO economic growth for the middle-class during the Bush era, we really can't afford any more "admirable" Republican policies in this country. Add to their bankrupt political ideology, their generally disgusting level of ignorance, the bent to incivility and violence, and you have a group of criminal thugs America needs to expose for what they are and disband. America will not prosper - and may very well collapse - as long as Republican treason is tolerated.
There are unemployed people who need government help and there are also those who would be more motivated to get a job if the government didn't continue to extend their unemployment. These two facts do not cancel each other out. To draw the conclusion that republicans have no compassion and liberals have no common sense is a generality that doesn't help the situation. Republicans do have a problem with Obama creating a thicker cushion for the unemployed by spending taxpayer money and coming up with new ways to tax the middle class. This is unfair and it has to stop. Since there's no chance that Obama will come to his senses it's left to voters to vote out those who refuse to be fiscally responsible and refuse to draw a line between the needy and the lazy.
Thanks to the Bush years I lost my 80,000 dollar a year job. I would rather bring home my 2000 every two weeks and my 20,000 in bonuses than collect 1000 dollars every two weeks and have to file bankruptcy. So much for govt staying out of my life.
how exactly was Bush responsible for your job loss? Did he somehow manage to create a slowdown in your industry or were other factors at play that had nothing to do with any president?
There are factors that have nothing to do with the President!? NO WAY!!!
"Republicans do have a problem with Obama creating a thicker cushion for the unemployed by spending taxpayer money and coming up with new ways to tax the middle class." Holly, You're not making sense. "thicker cushion...with taxpayer money," then "new ways to tax the middle class"? Those people on "unemployment" WERE a part of the tax-paying "middle-class" before they got their jobs disappeared by bankrupt Republican financial wizardry. Their unemployment compensation is money they paid into the system, not money coming out of your wallet (not to mention stimulus our economy needs). Do you realize that Reagan arranged for the biggest transfer of wealth in American history? $3 trillion from the middle-class to the top 2% of the country's wealthy elite. The majority of the country's "deficit" right now is two unfunded tax breaks to the wealthy that happened in the Bush era. There has been NO expansion or job growth for the middle class in 20 years. What part of Obama's determination to rebalance some of the power in this country by making the wealthy take on a greater share of the tax burden while giving the middle-class the largest tax break they've had in 40 years? What "new" middle-class taxes are you talking about? Maybe an easier question would be - what social aspect of Democratic agenda so disgusts you that you can't see that Republican ideology supports "corporations," and when will all of you "middle-class" Republicans wake up to the truth that Democratic ideology - for "we the people" - is the only hope the middle-class has of regaining some traction towards prosperity?
Gotta love their trickle down theory. I thought this is how they wanted it. The rich got their tax cut. It didn't create any jobs but caused us to lose 10 million jobs and now those who lost their job get to collect unemployment. Trickle Down theory. See it works.
SensiStar Typical liberal. You're the victim. You liberals are always the victim. You don't take any responsibility for your own situation. Maybe you should have thought ahead a little, competed harder, got training in a new job area. Did you just expect since you had a job that job would be there forever? The rich get rich because they take responsibility for themselves and adapt to changing circumstances. if you didn't or can't do that it's your problem. Trickle down does work but it doesn't mean you can sit back and expect everything will fall in your lap.
"Illegals stole my job! Affirmative action strikes again! Obama hates business and now I'm out of work! The liberal media just hates us hard-working Americans! Obama hates white people! Obama only cares about the fatcats on Wall Street, not us God-fearing families on Main Street! The school systems treat our kids to hate people in South! We, conservatives, we are the victims! Victims of the Liberal Agenda! When we do something wrong, it's just the liberal media out to get us! The ACORN pimp was framed! The DOJ is out to get Glenn Beck! People hate Sarah Palin because they're jealous! Whenever we lose our job, it's someone else's fault! Bush did something wrong? Blame Clinton! Blame Obama! Reagan did something wrong? Blame Carter! Conservatives did something wrong? Blame liberals! Our problems are never our fault! Our mistakes are never our responsibility!" Wait, what were we talking about again? Liberals not taking responsibility for their actions, blaming other people, and playing the victim? Hmmm.....
HollyK64 - in another post above you say this: To draw the conclusion that republicans have no compassion and liberals have no common sense is a generality that doesn't help the situation Now compare this to your comment that I am replying to. I would like to propose that you are not one of the compassionate Republicans that you claim exist. From the sound of your post here about liberal victimhood and the unemployed needing to have thought a little harder and gotten some more job training it sounds like you are one of the more standard fair cold hard b-tches of the Republican Party... aka a typical Republican. You also seem to post a LOT during the day. What do you do for a living? It seems like nothing but post to this site... perhaps you could use some better job training to make your employment skills more valuable to a potential future employer - maybe you could man a suicide hotline and suggest to the callers that they need to "suck it up and get over it"! Or you could be the one to deliver foreclosure notices from a bank to homeowners: "hey, the bank is foreclosing on you... Maybe you should have had better foresight and noticed that the government, the only institution that could have stopped widespread financial industry fraud, was turning a blind eye to malfeasance and realized that your job was in jeopardy and gotten some job training to move industries to one that wouldn't have been as affected by a global recession brought on by deregulation. Too bad I guess. Did I mention that on a personal level I didn't support the bail out at all and believe the banks should have been allowed to fail? You see, I don't believe in government intervention because the government should stay out of things... so yes, in theory I don't stand for anything but repetitively catastrophic economic collapse because I support deregulation and I also am against bail outs - don't stop a company from making horrible decisions that affect everyone no matter whether they were involved in the companies poor decision making processes or not because that intrusion would be a disturbance to the free market and people shouldn't be disallowed from making as much money as they can AND don't come to that companies rescue when they collapse for those poor decisions - this guarantees that everyone gets screwed! Thank you and have a good day!"
Holly, "Trickle down does work" (Yeah, and all Catholic priests are men of God.) No it doesn't. That's a bright idea some smart, rich guy thought up so al the stupid, poor people would give him their money. (What's really pathetic is how easy it is to brainwash the "poor people" into buying bullcrap.)
You are totally right fk711. After 30 yrs of Regans trickle down theory of econmics what has changed? In the 1980's 5% the population owned 90% of the nations wealth. Today the numbers remain the same 5% of the population own 90% of the wealth. The economc policies of the Republicans have let the 5% of the population real weath increase while the the "real americans" the working class has seen a major drop in ther wages ...
Hey Salam, what the hell kind of question is this====> "Is it the president's fault that Americans are better off than they were 30 years ago, and are thus not desperate to take whatever job that comes along?" Dude you're making it sound like the amount of unemployment compensation most people receive is some real serious cash. I hate to tell ya, but nothing could be further from the truth. Take the state of Florida for example. If a person made $1000 a week when employed, once unemployed the state compensation pays 27.5 percent of his weekly earnings. The federal government kicks in an additional 2.5 percent from the stimulus. How far can you stretch $300 a week..... and that's before taxes I might add. You need to get out more, cause most of the unemployed are desperately seeking work. Companies aren't hiring. They've discovered they can maintain the same productivity as before, but with a smaller payroll. Every day I see people really struggling to make ends meet... a great many of them have now exhausted their unemployment benefits. They're part of that percentage of out of work people that isn't being reported any more.
In no way has this country been going up over the last 30 years--far from it. Our decline started in the 1970s and it has been accelerating.
Hold up. Did some one hack rev's account. He's making some sense.
You are absolutely right. My daughter has been out of work for over a year and has desperately tried to find work every single day, five days a week. She is the sole support of three kids and trust me that $300 doesn't even cover her rent and utilities. I really resent anyone calling her a slacker. Especially some fat cat with a cushy job.
When there are six applicants for every job, it's hard to blame the unemployed for being lazy. Of course this doesn't stop conservatives from trying. They need to justify their selfishness.
The entire world is in the worst depression since the 1930s, so I'd be careful of calling the poor and unemployed 'slckers'. Under the present circumstances, the idea is silly. In the U.S., the real unemployment rate is at least double the official figure and millions of people have also lost value in their houses. In my opinion, we are also headed for another crash, which will be even worse than the one last year.
mcm Right on. Nobody is lazy People are destroyed. there is no work, and growth and anything going on in this country. All talk and no action. try to work with a bank.??ja, ja.Jobs, who is hiring, nor knowing what rules, taxes, healthcare, is coming. Investors, moving, out of the country. This year. concerned with all the restructuring.Both parties, all people in charge of the country past and present,destroyed it, Their arrogance, and division, in Washington,destroying,hopes, dreams.We have new competitors, chinese, Brazil, India, we no longer are the only ones, and we are slowly,dying.Does washington hear, on their Easter vacations. Besides, politics,is angrier daily.
Mr. Salam should read Barbara Ehrenreich bookBait and Switch - The (Futile) Pursuit of the American Dream by Barbara Ehrenreich
Americans are better off than they were 30 years ago but are much, much worse then they were three years ago. Mr. Salam needs to get out from under his media bubble and see the real world of no jobs, multiple part time jobs and under employment. The economy is getting worse every month, despite what the Obama-lovin' media reports.
SMH at the writer
This author hasn't a clue of the demeaning, humiliating process that surrounds these support payments from what is an employee funded insurance plan.
all depends on who you look at things. I've talked to a few former colleagues who cleary say "I make more from unemployment than from taking some $h!t job". Well, how about taking two such jobs and at least having some pride in paying your own way through life. Extending benefits up to 99 weeks does no one any favors, not hte companies that have to kick into the unemployment pool, not the taxpayer who picks up the remaining tab, not the govt which is losing out on tax revenues from working folks. It's easy to shoot the messenger, but the same govt that some blame for creating this mess is doing what exactly to fix it? When you enact policies that increase the cost of govt, you prevent people from being hired because businessfolks either know their costs are going up or are about to go up. It's not the economy, stupid, it's the govt spending.
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