« Against Extending Unemployment Benefits—Posner | Main | correction »

07/25/2010

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Joshua Norman

I would personally paid back all my unemployment compensation if the following policies were implemented:
1. The U.S. deports all the illegal immigrants in the country back to their home countries.
2. The U.S. enforces the immigration laws already on the books and removes the anchor baby loophole.
3. The U.S. reduces the number of legal immigrants permitted to enter the country as well as implements formal policies that focus immigration efforts on immigrants with the desired education, skills & capital.
4. The U.S. implements tariffs on imports, particularly on imports from the Third World.
5. The U.S. dedicated the revenue raised by tariffs to cut taxes for individuals, businesses and U.S. corporate entities.

I'm not wedded to these ideas but like the progressives I insist that those oppose to them are duty bound to offer alternatives.

dan bloom

Professor Posner, did you see IAN SAMPLE ...Guardian UK article quoting you re risk? short quick qusetion for you, may I? dan bloom, reporter, Taiwan


danny bloom, Tufts 1971
http://pcillu101.blogspot.com

dan bloom

is Dr Posner there email me at danbloom AT gmail dot com thanks am in Taiwan for the summer

Professor Posner, did you see IAN SAMPLE ...Guardian UK article quoting you re risk? short quick qusetion for you, may I? dan bloom, reporter, Taiwan


danny bloom, Tufts 1971
http://pcillu101.blogspot.com

msgnet

I think unemployment benefits should be scaled back to the minimum amount necessary for the worker and family to remain slightly above the poverty level. But I think these benefits should be available indefinitely. This is both insurance against catastrophic job loss effects and should also prevent moral hazard while being decent and humane at the same time.

Tyrone J

There's no doubt in any working person's mind that unemployment benefits should be extended. In light of the tax dollars these hard working people have paid and the golden parachutes and bailouts given to the banks, this is the only way every one else can make it through: http://lawblog.legalmatch.com/2010/03/10/greedy-ceos-are-overpaid-pigs-also-do-not-fly/

www.999wholesale.com

good post like it, perfect

Brian Davis, Austin, TX

In my opinion the last two extensions of federal support for unemployment compensation might as well be labeled welfare. Who pays for unemployment benefits? Employers, largely the sectors of Corporate America with the largest employee headcounts. Small business pays the unemployment taxes, too, but it's less able than Wal Mart or GE to absorb them or distribute them across a revenue base comprised of great numbers of customers. Small enterprises end up NOT hiring, NOT expanding, NOT incurring new cap-ex, NOT leasing more space, NOT improving employee wages, hours, or benefits. The tax-and-spend crowd likes unemployment compensation, always has. The theory holds that the payments represent economic stimulus that recipients will surely spend at the grocery store, the gas pump, and Wal Mart. I suppose that's true, but since when did unemployment compensation ADD JOBS and INCOMES to the American economy sufficient to offset the ones that disappeared? The answer is NEVER. There's very little any more, if anything, that the principal beneficiaries (retail sector) of unemployment compensation transfer payments can't obtain in sufficient volume and cheaper from non-U.S. suppliers, which, of course, don't pay U.S. and State unemployment taxes, if they pay ANY U.S. taxes. So it's all a huge mismatch, this last go-round to the tune of $33 Billion we can consider unrecoverable vote-buying.

NEH

I have an idea. Before anyone is allowed to speak on the topic of "Unemployment Compensation" they should first have to join the ranks of the millions of unemployed created by this current Economic Crisis. It's easy to condemn, when one sits in the position of being comfortably ensconced in a full time paying job with benefits. Try being tossed into the unemployed pool when there are no jobs available except as a "Walmart Greeter" (and then most won't qualify because they're over qualified) and have to maintain ones Health,Home,Life,Auto Insurances, one's mortgage, one's association fees, one's car payment, one's utility bills water/gas/electric/phone, one's food bill and keep shoes and clothes on Dick and Jane's feet and back. These are just the essentials of life in modern America. By Law, indivduals are not allowed to live under the Bridges or set up Unemployed Camps in order to reduce costs.

As for that tired old argument that Unemployment Comp. results in the development of a "lazy" unemployed worker is just B.S. as it always has been. Instead of "Unemployment Comp.", those who are currently unemployed would much rather have a "Full time, paying job with benefits" rather than "Unemployment Comp". So why are there NO JOBS?

Perhaps the sign of the times should read, "If out of work and looking for a job, don't stop in this town. We can't take care of our own." Adapted from signs hung all over America during the "Great Depression".

Michael

My state (Colorado) requires all individuals receiving unemployment compensation to apply for x number of jobs per week of benefits received. How does this fit into your calculations? Thank you.

acuvue oasys

Totally agree -99 weeks is far too long. I feel this directly ties into a social aspect as well - that by making it so long, people simply aren't motivated to seriously exhaust work search efforts until this time frame nears expiration.

NEH

Hey acuvue oasis! Ever been in the unemployment line and had to humiliate yourself just so you could eat. The fact of the matter is, that the Labor aspect of the current Economic Crisis has become so disjointed that the "normal" time on the unemployment role has risen from the "accepted" unemployment interval of three months to six months to nine months to twelve months and longer. I hope someday you get to experience it. Then we'll have to see what you say. And this is coming from an educated highly trained indvidual who's been caught up in this mess. State Dep't of Employment, can't help, over qualified or under qualified.

As for being seriously motivated? I've been putting out anywhere from five to ten resumes a week for the last six months. What happens? They're swallowed up in the Internet wasteland and black hole. Contact the HR Dept's, "How did you get our number? We're not supposed to talk to anyone! We'll contact you!" Network? No one knows anything - no job openings to speak of. Go door to door with hat in hand? Asked to leave or escorted out by Security. And remember the bills still fall due.

I stand by my original statement. Only those who have experienced "unemployment" should be allowed to comment on it.

Don the libertarian Democrat

"Once the period of unemployment becomes long enough, people begin to get the habits from being unemployed for a long time: they sleep late, develop various leisure interests, and at the same time their work skills depreciate from not using them for an extended period. Studies have shown that skill depreciation is a serious effect of being unemployed for a long time."

This is so silly it defies belief. When you go to a job interview, has anyone ever been told "We hear you've been sleeping late". You can only go to so many interviews. In fact, a lot of pre-interviews are now done online. Plus, sleeping late compared to what? You don't even know the hours of the job you might get. And what are these skills?

It's also illegal. If this fraud is so rampant, it should be easy to find. You have to list every 2 weeks the places you applied for work at and who you talked to. Plus, I paid in for 37 years before using it, only to get a small amount.

I have yet to see one piece of evidence compiled from following actual human beings. The idea that you can easily find a job right after your UI ends is silly. If it's not, show me the people and the jobs. As for moving, it costs money and there's no assurance you'll get a job.

It's about as scientific as saying that the people who don't join the military are cowards, whatever other reasons they give for their decision.

Zorba

It is exactly these policies that have made Europe a continent with past, current and future long term growth prospects in the self-extinction range of 1.5% per year; IN SPITE of the fact that Europeans, as individuals are more competent than the average American.

Therefore, for the US, a fraction of the European Welfare state burden will be enough to set the US on a similar perpetually anemic 1-2% annual growth rate. If the rate of the current recovery is so weak, what will the steady state long-term growth rate for the US be?

Therefore – as I keep reminding as a broken record now – in a world that grows by 4% on average, the US and Europe will loose standard of living at a rate of about 2.5% per year compared to the rest of the world. Of course, compounding inevitably leads to a situation where in a mere 30 years (one generation) the standard of living of Europeans and Americans compared to the rest of the world will have halved (1.025^30), with no end in sight. So with such a desperate future facing their children, what will Americans do? You guessed it! Vote for even more redistribution and more taxes i.e. even slower growth.

This, in a nutshell, is the Grecian vicious cycle at work, which is now eating the bowls of American exceptionalism. Once past the tipping point, there is no return. Just hope that you have not past it yet and can/will, make a 180 turn soon.

P.S. BTW, a fact that is ironically prescient and perhaps not quite a coincidence. Do you know the slogan under which the 1st socialist Greek prime minister (Mr. Andreas Papandreou, the man most responsible for setting in motion Greece’s eventual bankruptcy) got elected? That’s right: “Αλλαγή”, spelled “Allaghi” that is: “Change”. Who is in the Vanguard of political progress? The US or Greece?

http://www.yourdictionary.com/biography/andreas-papandreou
“…Papandreou campaigned with the slogan Allaghi (change), which led to PASOK’s triumph with 48 percent of the vote and 173 seats in Parliament….”

Eric Smith

Seriously we have people who have been on unemployment for 2 years, the system rewards them for not moving on. The system itself it highly flawed.

J

Let's see. Under U.S. Poverty Guidelines, a single person family with an income of under $10,830 in the 48 Contiguous States and the District of Columbia is considered to be impoverished. If it is a family of 2, the income level is $14,570. Unemployment pays somewhere between $200 and $300 per week. So, that's somewhere between $10,400 and $15,600 over the course of a year.

Anyone who thinks people on unemployment have it made just does not understand and should try living as an unemployed American for a little while. They also fail to grasp economics and unemployment levels. Jobs do not simply appear in the economy because people are looking for work. In fact, unemployment rolls increase when more people begin looking for work. Additionally, there has to actually be a demand for workers for there to be a reduction in current unemployment levels.

I feel that your analysis of comparing unemployment insurance to other forms of insurance fails to take into account that the premiums are paid each pay cycle out of the employee's paycheck.

The unemployment system could be improved with more job training and more government works programs to actually improve and enhance an unemployed person's job skills and making them more marketable to future employers but I doubt the funding is there for these programs.

B. G.

That’s right. Jobs do not just appear because people are looking for work – in the short term over a period of months that is.

But when American and European workers demand higher salaries and benefits (including unemployment benefits) beyond the economic fundamentals of worldwide competitiveness, then jobs do disappear. Not only that, but job scarcity then becomes permanent and endemic (see European perpetual high unemployment).

C. Ling

Perhaps people should take some personal responsibility and build safety buffers (savings etc.) for hard times, including recessions. Personal planning and responsibility? What a novel concept! Perhaps could have used two instead of three cars per family all these years, or a two bedroom rather than a three bedroom house etc. and put some money aside. Perhaps maybe even invest it, if I dare imagine. Is it really that hard to save 10% of your income in America, regardless of income level? Would it really degrade one’s standard of living that much, regardless of wealth level?

Dean

unemployment is such a grey area, you have the geneuine people out of work, and looking for new employment this is what the system was set up for.
And the other people who cheat the system and taking Tax payers money.
These sound be made to pay the money back with Interest.

Hyena

The idea that "it's not significant stimulus" but also a budgetary concern seems laughable to me. It's insignificant as stimulus because it is also insignificant in the budget, representing less than one-tenth of one percent of the budget.

So far, Fed analysis estimates that the impact of unemployment extensions on the unemployment rate is between 0.4% and 1.7% with the 1.7% being doubtful because it is based on a paper using data inapplicable to hiring practices since the late 1980s or so (namely layoff-rehire cycling, which is no longer common). A number closer to 0.4% seems likely.

Whatever the theoretical problems with unemployment insurance, the actual magnitude of the problem seems very small, amounting to between several hundred thousand to just over a million people in the labor force. Any marginal improvements in employment seem very small, especially if people are settling for lower wages (and hence likely lower levels of labor utilization). Reforms which increase worker stress seem unlikely to realize economic profits relative to the insurance scheme and reforms that work primarily by enhancing liquid savings present the possibility of creating artificial demand for liquid, high-quality assets (a problem that got us to this recession). I find the case for reform dubious and the proposals even more so.

Andrew Potter - Make Money Online Like A Guru

In my opinion, part of the economic problems currently being faced are due to the "handouts" being made. A rather sweeping statement I know, but the systems set up are generally flawed and open to abuse.

As a previous commentor made a point, there are too many people who cheat the system and also too many people who just aren't interested in employment.

I am always amazed at how easy it is to get "free money" - should people not be made to work for it in some capacity?

new balance

The office of the scholar is to cheer, to raise, and to guide men by showing them facts amidst appearances.Do you understand?

fdsgfg

Seriously we have people who have been on unemployment for 2 years, the system rewards them for not moving on. The system itself it highly flawed.http://www.wxshenzhou.com/

Ignacio

I think that this discussion is due only to the lack of market mechanisms.
Let me provide an example: In the case of Chile, the unemployment insurance is a mandatory saving (that create a personal account) + a tax (that create a public fund). The money is invested on the capital markets and the information is available (you receive a letter every 6 months with the data on your personal account and you can reveiw every time that you want on internet).
In the case that you need it, you will use the your personal account and if you don't have enough funds, then the public fund will put the money that you need. There is a time limit and the payment is decresing with time. For example the first month you receive X, the second 0.8X, the third 0.6X, until month 6 (I am not sure if it is 6 or 4).
The key issue is the link with ownership, due to that if I never use those funds, then the money will go to my pension account without taxes. As a consequence, I have the incentive to use the money only if I need it. Obviously this incentive is less strong if you have less money on your account.
You can get more information on http://siteresources.worldbank.org/SOCIALPROTECTION/Resources/SP-Discussion-papers/Labor-Market-DP/0612.pdf

PS: The pension system is a private system with personal accounts and the money is invested on capital markets, not like social security

Jaime L. Manzano

Perhaps unemployment benefits should result in increasing the age of eligibility for Social Security benefits by the same amount of time that the present unemployed receive unemployment benefits. That way, part of the unemployment costs would result in reducing the unfunded liability of Social Security by delaying future benefit outlays.

Joshua Norman

With regards to the criticism of unemployment benefits by B.G., Eric Smith, Brian Davis, acuvue oasys, Andrew Potter, C. Ling and fdsgfg will your allies in the business community stop bringing in cheap exploitable immigrants, legal or illegal and stop the practice of offsoring jobs to Third World countries? If illegals had been deported and the US limited immigration to those with advanced education, the number of unemployed would be no more than one-third of what it currently is, in spite of weak economic growth during the decade.

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