Paid Not to Work

Paid Not to Work
Four-year price tag for extra jobless benefits: $200 billion.
FEBRUARY 16, 2012

President Obama is crowing that the unemployment rate is falling—to 8.3% in January—but he and his party are still insisting as part of the payroll tax deal that payments to the jobless must increase again. So add on another $30 billion or so to the $200 billion that this extra "unemployment insurance" has already cost since the recession.

Jobless payments typically end after 26 weeks, with some states providing longer benefits. The idea is that these payments should assist a worker who loses a job during a transition to finding new work, instead of becoming a semi-permanent sinecure.

But for the last three and a half years those payments—about 35% to 40% of the worker's last pay check—have been extended eight times to an all-time high 99 weeks in many states. So now taxpayers pick up the check for as much as two years of not working, even as jobs become easier to find.

Republicans are at least trying to reform this de facto welfare program. The House wanted to cut the time limit to a still-generous 59 weeks, while Senate Democrats demanded 93. The tentative deal that may be voted on this week reduces that to 63 weeks for those states with a jobless rate at the national average or below. States with a rate above 9%—there are now 17—would be eligible for a maximum of 73 weeks.

The House also seems to have won some minor new conditions on those benefits. One reform would let states screen for illegal drug use. Another would require the long-term unemployed to undergo a job-eligibility review to assess what they need to return to work. This process could turn into one more phony bureaucratic test, but it might also cause some unemployed to enhance their readiness to return to the work force.

Democrats resisted even these requirements, and they reject the idea that these benefits discourage recipients from finding a job until after the checks stop. But nearly every study reveals the opposite—that extending benefits extends the length of time that people stay unemployed.

Two of President Obama's most senior economists—former White House aide Larry Summers and current Council of Economic Advisers chairman Alan Krueger—have published studies documenting this antiwork incentive. According to a study co-authored by Mr. Krueger in 2002: "Higher and longer duration UI benefits will cause unemployed workers who receive UI to take longer to find a new job."

This is surely one reason that the share of the jobless out of work for six months or more is still 42.9%. Democrats have kept the jobless rate higher for longer by trying to turn jobless insurance into a long-term entitlement. Democrats have also burdened state budgets with higher costs that they will have to make up with higher payroll taxes on business. This will slow the rate of business rehiring.

Republicans deserve credit for trying to stop this madness, which is unfair to the millions of Americans who work, especially those who may take a job at lower pay because they don't want to sit on the dole. The faster jobless insurance returns to 26 weeks, the better for employers, employees and the unemployed.

http://online.wsj.com/article/SB10001424052970203824904577217792498104980.html?mod=googlenews_wsj

 

It's very unfortunate, but even if they were 'working' - which I prefer, perhaps on bridges and infrastructure and all that, at least they are spending something. This helps bring most of the money back into the economy instead of them going on straight welfare, which costs much more.

Similar to paying big-Agriculture to not plant crops, been going on for years, a little weird, but I don't see anyone griping about Con-agra collecting money.

But, of course, we would all like to some results for our money, get those shovel ready jobs approved.

Why Does the Govt. Pay Farmers to Not Grow Crops?

Paying farmers not to grow crops was a substitute for agricultural price support programs designed to ensure that farmers could always sell their crops for enough to support themselves. The price support program meant that farmers had to incur the expense of plowing their fields, fertilizing, irrigating, spraying, and harvesting them, and then selling their crops to the government, which stored them in silos until they either rotted or were consumed by rodents. It was much cheaper just to pay farmers not to grow the crops in the first place.

Of course, paying people not to do work is bound to be politically awkward (think of the old New Yorker cartoon of an accordion player on a subway platform with a sign next to his cup that read, "Will not play Lady of Spain, 25 cents"). So the government described the program as an environmental one rather than an income maintenance scheme. As described to the public, it was compensation to farmers for retiring acreage to reduce fertilizer and pesticide runoff into the nation's water supply.


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Which is consistent with research that led to the 2010 Nobel Prize in Economics:

Nobel Prize in Economics awarded for unemployment research
The Nobel Prize in Economics was awarded to three economists who examined how unemployment can remain high while jobs stand vacant.

..."One conclusion is that more generous unemployment benefits give rise to higher unemployment and longer search times," the academy said....
http://www.csmonitor.com/Business/L...n-Economics-awarded-for-unemployment-research

 

No argument against this from me. As long as the payroll tax was lowered, so too should unemployment benefits be cut back. The whole idea is to get those payroll taxes lowered so that more people will be hired more quickly.