Do jobless checks subsidize laziness? Research shows….
Do unemployment benefits reduce the incentive to find work and thus increase the length of unemployment?
Percentage of American work force unemployed six months or longer. Underlying data series from the U.S. Bureau of Labor Statistics. Gray bars denote recessions (latest trough tentatively dated 6/09). Source: Federal Reserve Board of San Francisco.
It’s an interesting question, made more pertinent by the record increase in unemployment duration during the current recession. As of March, 4.3 percent of the U.S. work force had been unemployed for at least six months, much higher than the previous record of 2.6 percent in the ‘83 recession.
The question has largely broken along political lines. Some conservatives have argued yes, unemployment benefits lengthen unemployment because they in effect subsidize laziness. Liberals, on the other hand, point out that in the current economy the problem is a great shortage of jobs, not of job seekers. Statistics indicate that there are five or six job seekers for every job opening, with thousands of eager applicants showing up at every job fair.
Economists at the San Francisco Federal Reserve decided to tackle the issue, and seem to have hit upon a pretty good way to approach it. As they point out, roughly two-thirds of the unemployed are eligible for unemployment benefits, because they held full-time jobs that they lost through no fault of their own.
However, that leaves a significant number of unemployed who cannot collect benefits. The ineligible may have left their jobs voluntarily, they may have been self-employed or independent contractors, they may have been fired for cause or they may be new entrants into the job market. For whatever reason, they are jobless, they want jobs, but they collect no unemployment benefits.
Unemployment duration by reason (through December 2009, three-month moving average). The solid vertical line indicates the recession start; the dashed lines indicate effective dates for UI extensions (through 12/09). Source: Federal Reserve Board of San Francisco.
With two groups of unemployed — one that is collecting benefits, one that is not collecting benefits — you can begin to get at an answer. How long on average does each group remain unemployed? Put more bluntly, how big is this supposed “laziness subsidy?”
Here’s what they found:
“As of the fourth quarter of 2009, the expected duration of unemployment had risen about 18.7 weeks for job losers and about 17.1 weeks for leavers and entrants, using the years 2006-2007 as a baseline. The differential increase of 1.6 weeks for job losers is the presumed impact of extended UI benefits on unemployment duration.”
In other words, it exists, but it’s not much.
They also note that extended unemployment benefits (now as long as 99 weeks in some states, including Georgia) keep people in the official job market who might otherwise become discouraged and quit looking (proof of active job-seeking is a requirement of collecting benefits.) Without benefits, those people would cease going through even the motions of job search and drop out of the workforce altogether, dropping the official unemployment rate from 10 percent to 9.6 percent.
Their conclusion:
Although economists have shown that extended availability of UI benefits will increase unemployment duration, the effect in the latest downturn appears quite small compared with other determinants of the unemployment rate. Our analyses suggest that extended UI benefits account for about 0.4 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the past few years. It is not surprising that the disincentive effects of UI would loom small in the midst of the most severe labor market downturn since the Great Depression.
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337 comments Add your comment
Kamchak
April 21st, 2010
1:28 pm
But…but…but…how will we blame Those People now?
Doggone/GA
April 21st, 2010
1:31 pm
“how will we blame Those People now?”
Easy…”never let a good lie die”
Jack
April 21st, 2010
1:36 pm
Yes.
F-105 Thunderchief
April 21st, 2010
1:44 pm
Being on unemployment would help, but I’d be darned nervous about being jobless and busting my hump to find something else. I suspect many would feel the same way, not like they were on vacation.
Paul
April 21st, 2010
1:48 pm
A most clever way to approach the research.
Who’s gonna be the first to say the results are biased in favor of the traditional liberal view because it was tht San Francisco Federal Reserve that conducted the study?
Speaking of a guy who may be unemployed – the Oregon teacher being investigated for criminal activity in conjunction with the Tea Party movement – seems the local TP group has said they don’t want the guy fired.
Instead, they want him to attend sensitivity training and anger management courses.
Seriously! LOL! Who says those angry folks don’t have a sense of humor?
Doggone/GA
April 21st, 2010
1:49 pm
“Who’s gonna be the first to say the results are biased in favor of the traditional liberal view because it was tht San Francisco Federal Reserve that conducted the study?”
I guess you are.
TaxPayer
April 21st, 2010
1:50 pm
Never underestimate the ability of the Republican mind to establish a non-existant cause-and-effect if there are political points to be gained from it. The next thing you know, they’ll be telling us that lowering taxes to zero will increase tax revenues. Unfortunately, their constituency will believe it.
Dadgumdumb/GA
April 21st, 2010
1:56 pm
Slow it down Dog/GA. Give someone else a chance to post. We aren’t all sitting around waiting on pins and needles for your ridiculous responses on virtually every comment.
jewcowboy
April 21st, 2010
1:58 pm
Between the $1600 a month in check and the $600 month for Cobra, unemployment benefits are so amazing, I don’t know why anyone would ever look for a job…
Doggone/GA
April 21st, 2010
2:00 pm
“Give someone else a chance to post”
Wow! No one told me that Jay turned over control of this blog to you. Congratulations! Now, if you don’t want me here…you can have the fun of blocking my posts. Ownership has that power, you know.
Kamchak
April 21st, 2010
2:02 pm
Doggone/GA
Looks like you got your own personal leg-humper.
TaxPayer
April 21st, 2010
2:03 pm
Doggone/GA,
You have an admirer. Enjoy it but be aware that admirers can turn into stalkers and then it’s all downhill. The next thing you know, you’ll need a restraining order requiring that your virtual stalker stay a minimum of three posts away from your posts, etc.
jewcowboy
April 21st, 2010
2:03 pm
Doggone/GA,
“No one told me that Jay turned over control of this blog to you. ”
C’mon…2 posts in 30 minutes…that is crazy fast posting. You must a 14400 modem or something.
Doggone/GA
April 21st, 2010
2:05 pm
“Looks like you got your own personal leg-humper”
Yeah, the last refuge of the idea-less…criticise someone for doing the very same thing YOU are doing (in this case, posting on a blog)
Fun and games.
Jay
April 21st, 2010
2:07 pm
Let’s get back on this topic, or some topic, or anything but each other, because that never ends well.
Hillbilly Deluxe
April 21st, 2010
2:09 pm
In looking at the top graph, I noticed a trend. It readily shows that spikes in 6 month or longer unemployment follows recessions. That much is to be expected but if you will look at the low points in unemployment, the good times or dips in the graph, the numbers of long term unemployed are getting larger as the cycles progress.
Is that due to population growth? Perhaps it is, but I wonder if it doesn’t show a more long term problem that we need to be looking at. If long-term unemployment is growing in the good cycles, we need to figure out why and address it.
As to Jay’s original question, “Do jobless checks subsidize laziness?”, I’m sure it does in a few cases, humans being humans and all, but I doubt it’s anywhere as widespread as some folks believe.
Doggone/GA
April 21st, 2010
2:11 pm
“anything but each other, because that never ends well.”
Yep, no doubt. We’re just waiting for the nay-sayers to catch up that there’s a new topic!
Midori
April 21st, 2010
2:13 pm
Hi Doggone
looks like you’ve hit quite a nerve.
GOOD JOB!!!
Paul
April 21st, 2010
2:13 pm
Okay, who’s gonna be first to ask why, if the expected duration of unemployment in this study is 17-19 weeks, why have Democrats put thru a 99-week unemployment benefits scheme?
Why, by golly, I guess I am!
Doggone/GA
April 21st, 2010
2:16 pm
“If long-term unemployment is growing in the good cycles, we need to figure out why and address it.”
Hillbilly – it would be interesting to look back at the cycles in the “good times” too. Because if the long-term unemployment trend you’ve noticed seems to recur in “generational” cycles (roughly 18-20 years) it might be a result of larger numbers of births in the “good times” that lead to an “excess” number of new unemployed 19-20 years later.
TaxPayer
April 21st, 2010
2:21 pm
Why is Georgia’s unemployment rate so high? It must be due to stimulus money. Cash for clunkers, huh.
Jay
April 21st, 2010
2:24 pm
There are several explanations, Paul.
One would be that the 99-week extension is available only in those states with a particularly high unemployment rate.
Another would be that the 18 weeks you cite is actually the INCREASE over the 12-week average duration of unemployment, meaning that the average length of unemployment is now 30 weeks.
A third would be that average means average. Some people, depending on luck, job skills, networking, persistence, will get a new job in a few days. An unemployed autoworker in Michigan, on the other hand, might have a much harder time.
TaxPayer
April 21st, 2010
2:25 pm
“Do jobless checks subsidize laziness?”,
Perhaps I can apply for a research grant to study this question. I wonder if I would have problems getting participants for a long-term study.
Jay
April 21st, 2010
2:26 pm
And I should add that when I interviewed Saxby Chambliss and Mitch McConnell recently, both were strongly supportive of extended benefits, and rejected my question about whether it might be time to curtail them. They questioned how Dems financed those benefits, but were very much in support of the benefits themselves.
TaxPayer
April 21st, 2010
2:27 pm
An unemployed autoworker in Michigan, on the other hand, might have a much harder time.
MicroSoft has lots of openings if you speak Mandarin Chinese and are willing to relocate, at your own expense, of course.
TaxPayer
April 21st, 2010
2:30 pm
CHK or ADM? Hmmmmm!
jewcowboy
April 21st, 2010
2:32 pm
If the average Georgian gets $3900 per month in (gross) pay, the $1760 (gross) a month in unemployment compensation is not the golden egg Republicans seem to think it is. If anything, it will help stretch savings a bit longer…that is about it.
No one who is making a decent wage, is going to settle for half a paycheck for very long.
NowReally
April 21st, 2010
2:34 pm
As someone who has NEVER collected unemployment insurance (thank God); I find the thought of (jobless benefits = lazy) as uninformed rhetoric. On my lazy days the thought of quitting or volunteering to resign from my JOB; never occurred. I guess because I like having a home and food to eat; much more than I like being unemployed.
Matter of fact, everyone I know that is currently unemployed was gainfully employed for 20 years or more with the same company. These people were so lazy; they went to work for 20 years for a company that eventually moved overseas. They were so lazy; they gave up combined incomes of more than $100,000 to live on unemployment benefits.
Wow, being lazy really does pay.
Doggone/GA
April 21st, 2010
2:35 pm
“No one who is making a decent wage, is going to settle for half a paycheck for very long”
Agreed…but let’s put it this way: No one who is making a decent wage, is going to settle for half a paycheck for ANY LONGER THAN THEY HAVE TO
TaxPayer
April 21st, 2010
2:39 pm
Agreed…but let’s put it this way: No one who is making a decent wage, is going to settle for half a paycheck for ANY LONGER THAN THEY HAVE TO
Hence, the Republican answer is to make sure that you don’t have to by eliminating that unemployment subsidy. Problem solved. All people will be forced to stay employed or else.
Doggone/GA
April 21st, 2010
2:41 pm
“All people will be forced to stay employed or else.”
But, but…isn’t that SOCIALISM?!
TaxPayer
April 21st, 2010
2:42 pm
I’ve got lots of $5/hour jobs. No benefits. Eight hours of work for eight hours of pay. No takers though. Even I refuse to do it.
Hillbilly Deluxe
April 21st, 2010
2:43 pm
jewcowboy @ 2:32
I would be curious as to where you got those figures. Both numbers seem high to me. Not saying you’re wrong, just curious.
Doggone/GA
April 21st, 2010
2:44 pm
“Even I refuse to do it”
Sounds like the guy looking for a job, who got insulted when all he could fine was work.
Kamchak
April 21st, 2010
2:44 pm
All people will be forced to stay employed or else.
You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store
NowReally
April 21st, 2010
2:46 pm
TaxPayer
April 21st, 2010
2:42 pm
At that rate it would be better to be your slave. At least you will house and feed me.
TaxPayer
April 21st, 2010
2:46 pm
But, but…isn’t that SOCIALISM?!
“You Go!” Get job. Build cars. Cheap cars. Everyone have car. Same car. No need door locks or ignition switch… .
Paul
April 21st, 2010
2:47 pm
Thanks,Jay (2:24)
I was kinda hoping a regular would’ve picked up on it.
My main thought, though, was that regardless of duration – whether it’s 18 weeks or 99 weeks, the main thesis holds – regardless of benefits, most people want a job.
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin....
April 21st, 2010
2:47 pm
I’ve had people ask me to fire them so that they could collect unemployment and lay up at the house, but I’m sure that a White House socialist stooge probably knows more about it than us out here in the world do, just sayin…
@@
April 21st, 2010
2:48 pm
I’m not gonna go so far as to call it lazy, jay, but diminishing the sense of urgency? Yeah.
That graph almost makes it appear the democrats know there won’t be any jobs forthcoming since 99 weeks beats the average. Well, nobody knows better than the person(s) whose intentions are known only to them what their reasoning might be.
The dems bleed money we don’t have for the unemployed, but when it comes to stimulating job growth in the private sector? They put a tourniquet on that one.
Doggone:
I’m gonna sign up for sensitivity classes just for you. NOT! When have you ever seen me argue for civility? I’ve always said the individual who “feels” insulted has to be the one to get past it. You can’t? Your problem, not mine…you silly girl.
jewcowboy
April 21st, 2010
2:48 pm
TaxPayer,
“I’ve got lots of $5/hour jobs. No benefits. Eight hours of work for eight hours of pay. No takers though. Even I refuse to do it.”
I was listening to a story on NPR about a week or so ago, about this very problem. It seems, even with 10% unemployment, the agricultural industry is finding it more and more difficult to find employees. Most legal employees do not want these jobs, and they increasingly cannot hire undocumented workers…
Dusty
April 21st, 2010
2:49 pm
Oh no, a new subject with the same old bloggers. We need a CHANGE…….Where’s Obama when you need him….SUBSIDIZE bloggers I say!!!!! Better results!!!
Obama Regime Enforcer
April 21st, 2010
2:49 pm
Obama’s Private Army is real.
See the Patient Protection Affordable Care Act, page 1312:
http://democrats.senate.gov/reform/patient-protection-affordable-care-act-as-passed.pdf
SEC. 5210. ESTABLISHING A READY RESERVE CORPS.
Section 203 of the Public Health Service Act (42 U.S.C. 204) is amended to read as follows:
SEC. 203. COMMISSIONED CORPS AND READY RESERVE CORPS.
(a) ESTABLISHMENT–
(1) IN GENERAL.–here shall be in the Service a commissioned Regular Corps and a Ready Reserve Corps for service in time of national emergency.
(2) REQUIREMENT.–All commissioned officers shall be citizens of the United States and shall be appointed without regard to the civil-service laws and compensated without regard to the Classification Act 2 of 1923, as amended.
(3) APPOINTMENT.–Commissioned officers of the Ready Reserve Corps shall be appointed by the President and commissioned officers of the Regular Corps shall be appointed by the President with the advice and consent of the Senate.
(4) ACTIVE DUTY.–Commissioned officers of the Ready Reserve Corps shall at all times be subject to call to active duty by the Surgeon General, including active duty for the purpose of training.
(5) WARRANT OFFICERS.–Warrant officers may be appointed to the Service for the purpose of providing support to the health and delivery systems maintained by the Service and any warrant officer appointed to the Service shall be considered for purposes of this Act and title 37, United States Code, to be a commissioned officer within the Commissioned Corps of the Service.
(b) ASSIMILATING RESERVE CORP OFFICERS INTO THE REGULAR CORPS.—Effective on the date of enactment of the Affordable Health Choices Act, all individuals classified as officers in the Reserve Corps under this section (as such section existed on the day before the date of enactment of such Act) and serving on active duty shall be deemed to be commissioned officers of the Regular Corps.
[Note here that those personally appointed by BO -- without advice and consent of the Senate -- automatically become a part of the Regular Corps. Ed.]
(c) PURPOSE AND USE OF READY RESERVE.–
(1) PURPOSE.–The purpose of the Ready Reserve Corps is to fulfill the need to have additional Commissioned Corps personnel available on short notice (similar to the uniformed service’s reserve program) to assist regular Commissioned Corps personnel to meet both routine public health and emergency response missions.
(2) USES.–The Ready Reserve Corps shall–
(A) participate in routine training to meet the general and specific needs of the Commissioned Corps;
(B) be available and ready for involuntary calls to active duty during national emergencies and public health crises, similar to the uniformed service reserve personnel;
(C) be available for backfilling critical positions left vacant during deployment of active duty Commissioned Corps members, as well as for deployment to respond to public health emergencies, both foreign and domestic; and
(D) be available for service assignment in isolated, hardship, and medically underserved communities (as defined in section 399SS) to improve access to health services.
(d) FUNDING.—For the purpose of carrying out the duties and responsibilities of the Commissioned Corps under this section, there are authorized to be appropriated such sums as may be necessary to the Office of the Surgeon General for each of fiscal years 2010 through 2014. Funds appropriated under this subsection shall be used for recruitment and training of Commissioned Corps Officers.
Peadawg
April 21st, 2010
2:52 pm
Like I’ve said, as long as there is PROOF that the unemployed are ACTIVELY LOOKING FOR A JOB, then there’s no problem.
Doggone/GA
April 21st, 2010
2:53 pm
“you silly girl”
Thanks for playing.
Hillbilly Deluxe
April 21st, 2010
2:53 pm
It seems, even with 10% unemployment, the agricultural industry is finding it more and more difficult to find employees. Most legal employees do not want these jobs, and they increasingly cannot hire undocumented workers…
Perhaps the legal employees don’t want them, at the salary offered. That would indicate a shortage of labor, so if the law of supply and demand works, the cost of labor should go up. Maybe they could find more workers, if they offered to pay higher wages.
Doggone/GA
April 21st, 2010
2:54 pm
“as long as there is PROOF that the unemployed are ACTIVELY LOOKING FOR A JOB”
and there IS proof…it’s a requirement in order to GET unemployment benefits.
jewcowboy
April 21st, 2010
2:56 pm
Hillbilly Deluxe,
“Both numbers seem high to me.”
GA median income: http://factfinder.census.gov/servlet/GRTTable?_bm=y&-_box_head_nbr=R1901&-ds_name=ACS_2008_1YR_G00_&-_lang=en&-format=US-30&-CONTEXT=grt
GA unemployment compensation: http://www.sun-sentinel.com/news/local/southflorida/sfl-flzunemployment0616sbjun16,0,7968154.story
Bosch
April 21st, 2010
2:57 pm
“but when it comes to stimulating job growth in the private sector?”
Why is the government’s job to stimulate job growth in the private sector? You can’t have it both ways, either the government intervenes in the private world or it doesn’t – you don’t get to chose the ways of intervention based on how you think the world should work. Either you want the governments help, or you don’t. But if you are against unemployment benefits, then by default you must also be against government stimulating the economy in the private sector.
Doggone/GA
April 21st, 2010
2:57 pm
“Maybe they could find more workers, if they offered to pay higher wages”
I think the real issue is the claim that “illegals are taking jobs from “real” Americans” Which claim is sort of “shot in the foot” by the FACT that “real Americans” don’t WANT those jobs.