Natural experiment on unemployment compensation

[Rshermr]

A big argument made on the right is that unemployment compensation causes the unemployed to not seek jobs as vigorously and therefore lowers employment. So conversely, when in January Congress in its infinite wisdom let extended unemployment benefits expire, there should be a surge in employment, at least among the formerly long term unemployed, right?

It's a wonderful story except for one problem: it never happened. There is not one shred of evidence that cutting unemployment benefits off at 26 weeks led to a single extra worker employed; zero, zip, nada. The lack of comment from the same right-wing economists on this fact is deafening. Apparently there is no way to even cook the numbers to feign such an effect that was pronounced with such vigor just a few months ago.

This is pretty much the state of all conservative labor economics: politically attractive speculation with absolutely no evidence. At least in a demand-constrained economy (Hello, what have we been in for the last six years?).

Of course silly things like theory and evidence never have gotten in the way of conservatives living in The Alternate Reality. This is a proto-typical zombie idea. It does not matter how often it is disproven, after a few weeks someone will trot it out again to "prove" the "common sense fact" (code for something that can't be proven therefore must be passed off as self-evident even when all the facts show it to be false) that the way to fight unemployment is to abolish the minimum wage and all unemployment benefits. Anyone want to bet that this solution will not be advanced by Republicans in the coming election?

Graph: Total nonfarm payroll employment (seasonally adjusted)

Oops.
That only works if you think giving people incentives doesnt change their behavior. It's an absurd proposition. It has been demonstrated many times that people with ready access to UE benefits continue to receive them instead of taking a job because the opportunity costs for giving up benefits are higher than what any job might pay.

No. Actually, the assumption that is absurd is yours. Which is copied, of course, from the standard bat shit crazy conservative sites that you frequent. Which continues to make you irrelevant. Which is why you have NO proof of your claim.

 

[The Rabbi]

A big argument made on the right is that unemployment compensation causes the unemployed to not seek jobs as vigorously and therefore lowers employment. So conversely, when in January Congress in its infinite wisdom let extended unemployment benefits expire, there should be a surge in employment, at least among the formerly long term unemployed, right?

It's a wonderful story except for one problem: it never happened. There is not one shred of evidence that cutting unemployment benefits off at 26 weeks led to a single extra worker employed; zero, zip, nada. The lack of comment from the same right-wing economists on this fact is deafening. Apparently there is no way to even cook the numbers to feign such an effect that was pronounced with such vigor just a few months ago.

This is pretty much the state of all conservative labor economics: politically attractive speculation with absolutely no evidence. At least in a demand-constrained economy (Hello, what have we been in for the last six years?).

Of course silly things like theory and evidence never have gotten in the way of conservatives living in The Alternate Reality. This is a proto-typical zombie idea. It does not matter how often it is disproven, after a few weeks someone will trot it out again to "prove" the "common sense fact" (code for something that can't be proven therefore must be passed off as self-evident even when all the facts show it to be false) that the way to fight unemployment is to abolish the minimum wage and all unemployment benefits. Anyone want to bet that this solution will not be advanced by Republicans in the coming election?

Graph: Total nonfarm payroll employment (seasonally adjusted)

Oops.
That only works if you think giving people incentives doesnt change their behavior. It's an absurd proposition. It has been demonstrated many times that people with ready access to UE benefits continue to receive them instead of taking a job because the opportunity costs for giving up benefits are higher than what any job might pay.

No. Actually, the assumption that is absurd is yours. Which is copied, of course, from the standard bat shit crazy conservative sites that you frequent. Which continues to make you irrelevant. Which is why you have NO proof of your claim.

Ok so you admit I am correct. Wasn't too hard, was it?

 

[Rshermr]

Graph: Total nonfarm payroll employment (seasonally adjusted)

Oops.
That only works if you think giving people incentives doesnt change their behavior. It's an absurd proposition. It has been demonstrated many times that people with ready access to UE benefits continue to receive them instead of taking a job because the opportunity costs for giving up benefits are higher than what any job might pay.

No. Actually, the assumption that is absurd is yours. Which is copied, of course, from the standard bat shit crazy conservative sites that you frequent. Which continues to make you irrelevant. Which is why you have NO proof of your claim.

Ok so you admit I am correct. Wasn't too hard, was it?

Perhaps you should read what I wrote again. Hardly an admission that you are correct about anything. Just the opposite. What you did was prove oldfart correct. In this post, you simply proved me correct.
Keep it going, me boy. Apparently you are just too stupid to see the folly that you are. But you do provide comic relief.

 

[Darkwind]

No. Actually, the assumption that is absurd is yours. Which is copied, of course, from the standard bat shit crazy conservative sites that you frequent. Which continues to make you irrelevant. Which is why you have NO proof of your claim.

Ok so you admit I am correct. Wasn't too hard, was it?

Perhaps you should read what I wrote again. Hardly an admission that you are correct about anything. Just the opposite. What you did was prove oldfart correct. In this post, you simply proved me correct.
Keep it going, me boy. Apparently you are just too stupid to see the folly that you are. But you do provide comic relief.

So, you wrongly think you are correct, yet the argument has been misstated right from the get go.

There is not one shred of evidence that cutting unemployment benefits off at 26 weeks led to a single extra worker employed;

There has never been a conditioned argued that ending unemployment would lead to a job. The argument is that people would then be forced to look for a job AND THAT they would then be required to lower their standards to a more realistic expectation.

So, go get with your friends and give an accurate portrayal of the argument (not your colored perception tainted by your fucked up ideology) and reform your position to reflect reality.

 

[Rshermr]

Ok so you admit I am correct. Wasn't too hard, was it?

Perhaps you should read what I wrote again. Hardly an admission that you are correct about anything. Just the opposite. What you did was prove oldfart correct. In this post, you simply proved me correct.
Keep it going, me boy. Apparently you are just too stupid to see the folly that you are. But you do provide comic relief.

So, you wrongly think you are correct, yet the argument has been misstated right from the get go.

There is not one shred of evidence that cutting unemployment benefits off at 26 weeks led to a single extra worker employed;

There has never been a conditioned argued that ending unemployment would lead to a job. The argument is that people would then be forced to look for a job AND THAT they would then be required to lower their standards to a more realistic expectation.

So, go get with your friends and give an accurate portrayal of the argument (not your colored perception tainted by your fucked up ideology) and reform your position to reflect reality.

Me poor ignorant con, let me explain. You are saying that the unemployed are not looking for a job, being so happy to receive unemployment. Which you can not prove. And can not be proven. Seems to be pretty much untrue, overall. If you are saying there are some who like to live like paupers, and exist on unemployment, then I would agree with you. But not enough of them to make a difference. Very few unemployed workers enjoy seeing their family live without. Very very few like to see themselves live that way. So, you see, you are simply posting dogma. All studies of the subject say the opposite of what you post. Every single study out there.
So, we understand you hate workers. Think they should all see their families suffer so that we can save a few tax $. Got it.
And you do not believe that we have an aggregate demand problem. Because if you did, you would understand that cutting unemployment payments will simply hurt that problem. That is, it will cause a decrease in aggregate demand. Again, as any study of the subject will tell you.
Now, try to understand, me ignorant con tool I never indicated that I thought you believed that cutting unemployment would create jobs. Even you may have sufficient intelligence to understand that is a stupid argument. What you do not understand, of course, is that ending unemployment to any extent will decrease aggregate demand, and that WILL cause job losses.

Probably way beyond your interest to understand. Back to your bat shit crazy con web sites, dipshit. Keep digging up that dogma.

By the way, me lying con, you attributed the following to me:

There is not one shred of evidence that cutting unemployment benefits off at 26 weeks led to a single extra worker employed;

Not my statement, me lying con. Nor did I argue it. Just you trying to put words in my mouth. Those of us with integrity do not do such things. But then, no one is accusing you of having integrity.

 

[oldfart]

A big argument made on the right is that unemployment compensation causes the unemployed to not seek jobs as vigorously and therefore lowers employment. So conversely, when in January Congress in its infinite wisdom let extended unemployment benefits expire, there should be a surge in employment, at least among the formerly long term unemployed, right?

It's a wonderful story except for one problem: it never happened. There is not one shred of evidence that cutting unemployment benefits off at 26 weeks led to a single extra worker employed; zero, zip, nada. The lack of comment from the same right-wing economists on this fact is deafening. Apparently there is no way to even cook the numbers to feign such an effect that was pronounced with such vigor just a few months ago.

This is pretty much the state of all conservative labor economics: politically attractive speculation with absolutely no evidence. At least in a demand-constrained economy (Hello, what have we been in for the last six years?).

Of course silly things like theory and evidence never have gotten in the way of conservatives living in The Alternate Reality. This is a proto-typical zombie idea. It does not matter how often it is disproven, after a few weeks someone will trot it out again to "prove" the "common sense fact" (code for something that can't be proven therefore must be passed off as self-evident even when all the facts show it to be false) that the way to fight unemployment is to abolish the minimum wage and all unemployment benefits. Anyone want to bet that this solution will not be advanced by Republicans in the coming election?

Have you read Piketty's Capital in the Twenty-First Century? I just downloaded it on my Kindle and I can't put it down.

Read the review by the Kperson and will start the book soon. I've been following Piketty for a few years and look forward to it. There is a back story, which I have alluded to before about how you get access to the raw tax data he used and why he and his associates have a couple year head start on the field.

The thing that interests me the most is his integration of growth theory, marginal productivity theory of factor distribution, and distribution theory among groups and classes. Apparently he has some additional research not in the book (the sequel?). Also his grasp and use of economic history is impressive.

I expect a lot of pontificating on the right, but there is truly no intellectual counter to Piketty. The right has become totally bankrupt intellectually, and most conservative economist have either abandoned the right's political economy, become obvious paid stooges with no professional ethics or standing left, or degenerated into blathering idiots. Note I asked a few months ago who would replace people like Feldstein (who essentially changed sides) and what their ideas were. NO ONE HAS ADVANCED ANY SORT OF ANSWER. There is no conservative economic theory today, only pathetic dogma. At least Irving Fisher had a respectable body of work when he became the poster child for a failed theoretical structure and has had a modest comeback. But these clowns will be remembered in the same category as physicians who believed in bleeding patients, the flat earth advocates, and evolution deniers. The only difference is that the latter three groups will be remembered as mostly mistaken but sincere while the conservative "economists" will be mainly remembered as having done it for the money.

 

[oldfart]

Dear oldfart person. How about this as an "excuse" for eliminating extended unemployment benefits:

UEC is INSURANCE! You pay a bit and your employer pays a bit out of every paycheck while you are working. As with any other kind of insurance, if the indemnified event occurs (i.e., you lose your job), you are entitled to be indemnified up to the limit of coverage. The limit of coverage on UEC is 26 weeks of compensation. At that point you have exhausted the benefits you and your employer purchased with your payroll contributions. Anything beyond 26 weeks is nothing more than a government handout, at the expense of your productive American neighbors.

The U.S. Federal Government does NOT have any extra money sitting around. Every dollar they spend on "extended unemployment benefits" must be borrowed. When money is borrowed, the taxpayers have to pay interest on it in perpetuity, or if something really crazy happens, repay the debt.

And why should the people who have already gotten 26 weeks in benefits be singled out for this generous treatment? Are they more deserving than never-employed adults looking for their first job? Women trying to get back into the workforce after many years of raising children? Unemployed people whose benefits ran out a couple years ago, but they still haven't found work?

Could the money be better spent on repairing our crumbling infrastructure, or building a fucking high speed train in California?

Regardless, it is money that is not sitting somewhere waiting to be spent. It is money that would have to be borrowed for the purpose.

No fucking justification in the world.

Apparently you are unaware that in 46 states and at the federal level unemployment is funded entirely by a tax on employers (not everyone is in California). Funny kind of insurance where the beneficiaries are not the ones paying the premiums. But I welcome your premise that all social insurance creates contractual rights and is morally equivalent to private insurance.

 

[oldfart]

Ironic that I am listening to Rep. Ryan testify in front of the Rules Committee for his budget a couple weeks ago. He is giving a drastic scenario if the budget is not balanced in all possible haste. Who is drawing a more accurate projection? There is an alternative budget which is realistic, more realistic than Ryan's. If unemployment benefits are not extended people will have less food, or at less lower quality food.

(Rep. Sessions just compared the U.S. to Greece. Rep. Ryan agrees.)

Yup. And then again, sessions and ryan tend to channel Reagan whenever possible. Perhaps we should do as reagan did when the ue rate hit the second highest rate in the history of keeping track of it, during reagans first term after lowering tax rates by a new record amount. Lowered the rates in Feb 1981 as I recall, and the ue rate rocketed upward for the next 15 months or so. To 10.8%. Highest to this point in time since the great depression days of 1929.
So, since sessions and ryan love reagan, perhaps we should follow his lead. And what did reagan do?? Why, he increased taxes 11 times and increased gov spending greatly. Stimulated the heck out of the economy. And what do you know??? Why, it worked. Perfect.

Now that we are off topic I am going to run with it. I was listening to a Committee hearing the other day. Rep. Woodall, Mr. Over-animated himself, was talking about cutting the debt and deficit. He stated how getting to a balanced budget would allow the government to fund education, programs for children, and other social programs. I think this is supposedly an understood but unstated concept. The Republican's seem to think that social programs and investment in America are good things. They are just to put it off until after the budget is balance, and maybe the debt is payed off. That does not make any sense in several ways but it seems to be their reality.

Actually in 2001 when Republicans inherited a surplus, they did not consider expanding any programs except defense and corporate welfare. They used the surplus to give the wealthiest a giant tax cut. Any representation that these people today have any intention of using any surplus to benefit the lowest 99.8% of the population in any form is just a damnable lie. Reagan was at least honest about wanting to cut government to lower taxes on the wealthy and to never restore cuts to social programs. "Starve the beast", remember?

 

[oldfart]

Oops.
That only works if you think giving people incentives doesnt change their behavior. It's an absurd proposition. It has been demonstrated many times that people with ready access to UE benefits continue to receive them instead of taking a job because the opportunity costs for giving up benefits are higher than what any job might pay.

Now could you provide me with the citation to the BLS analysis or any other that makes the jump from your cute story to an analysis that addresses causation? I repeat: there is absolutely no evidence of such an effect, just fairy tale stories.

 

[oldfart]

This may be a little off subject but still about jobs: do any of the real economists posting here think that the off shoring of manufacturing jobs and importing of hb-1 visa holders that work for less, has hurt the job situation in this country? If the answer is yes, what could be done about it?

For every one job off shored there are 3 created domestically. Employers hire foreign workers not because they are cheaper but because getting Americans qualified to do those jobs is tough.
So your entire post is based on fallacies.

You are a great one for making statements without any reasoning or proof. Again is there any evidence for your opinion?

 

[oldfart]

Old Fart I think you are addressing the wrong problems:

The cause of most long term UE is an effective lack of mobility due to poor local housing prices and/or a two salary family budget.

The distribution of long-term unemployment tends to be disproportionately blue.

Extended UE does not help the Rs but its lack could drive CA, IL or NJ into default prior to the 2016 election. Since Christie has effectively zero chance of winning the nomination this is a low cost/risk but possibly high return strategy. It is a smart but cynical move.

This is the structural unemployment argument. A little reflection shows that it is ridiculous. There is no evidence for it to begin with; just a nice story. How did we get from near full employment to 10% in a matter of months? Did millions of workers suffer simultaneous amnesia and lose their job skills? Did family responsibilities suddenly make workers immobile?

Historically America went from 12% unemployment to virtually none in 1940-1. Where were the structural barriers then? The obvious solution is that structural unemployment disappears when the is a sufficient increase in aggregate demand. Or perhaps people don't believe in the ability of markets to utilize labor resources efficiently through training and other adjustments when there is enough demand?

 

[oldfart]

You'll forgive me for skipping all of the "who said what" parts of the discussion.

There has never been a conditioned argued that ending unemployment would lead to a job. The argument is that people would then be forced to look for a job AND THAT they would then be required to lower their standards to a more realistic expectation.

You are correct that this is the rationale or story line for claims that unemployment benefits reduce job search and lead to higher unemployment. That's the position I attacked in the OP. Most economic theory begins with some kind of story like this, and this one is no better or worse than many such stories. But the story is not evidence for the position by itself, and creates no supposition that the story is correct or wrong. That is the job of broader economic theory, historical analysis, and most importantly of econometrics. In short, the story has to show up in the numbers. My position is that it doesn't, and the onus is on the tellers of the story to prove that the numbers back up the story.

So, go get with your friends and give an accurate portrayal of the argument (not your colored perception tainted by your fucked up ideology) and reform your position to reflect reality.

There is no need for me to get with anyone. I gave an accurate portrayal in the OP and a more extended one in this post. If you have a response; give it.

I use vivid language to advance my points. Apparently you cannot advance yours without obscenity. It appears you cannot tell the difference. Which also tells me you know little of economics and have never participated in a real economic (or any other) debate. You would use that language in a class or seminar?

If you don't want to be dismissed by others, try to express yourself as someone who deserves and extends others some respect.

 

[RandomVariable]

Old Fart I think you are addressing the wrong problems:

The cause of most long term UE is an effective lack of mobility due to poor local housing prices and/or a two salary family budget.

The distribution of long-term unemployment tends to be disproportionately blue.

Extended UE does not help the Rs but its lack could drive CA, IL or NJ into default prior to the 2016 election. Since Christie has effectively zero chance of winning the nomination this is a low cost/risk but possibly high return strategy. It is a smart but cynical move.

This is the structural unemployment argument. A little reflection shows that it is ridiculous. There is no evidence for it to begin with; just a nice story. How did we get from near full employment to 10% in a matter of months? Did millions of workers suffer simultaneous amnesia and lose their job skills? Did family responsibilities suddenly make workers immobile?

Historically America went from 12% unemployment to virtually none in 1940-1. Where were the structural barriers then? The obvious solution is that structural unemployment disappears when the is a sufficient increase in aggregate demand. Or perhaps people don't believe in the ability of markets to utilize labor resources efficiently through training and other adjustments when there is enough demand?

What is ridiculous is to say there is not structural unemployment. There are no jobs in rural American. There are no jobs in the inner city. All this talk of learned dependence is from those who have gained from an 'evolving/changing/structurally different' economy who do not want to assist in providing the means to does who 'have not/can not' adapt, such as those in rural America and the inner city. This country was not built on 'I've got mine, screw you' and we should not start now.

 

[The Rabbi]

This may be a little off subject but still about jobs: do any of the real economists posting here think that the off shoring of manufacturing jobs and importing of hb-1 visa holders that work for less, has hurt the job situation in this country? If the answer is yes, what could be done about it?

For every one job off shored there are 3 created domestically. Employers hire foreign workers not because they are cheaper but because getting Americans qualified to do those jobs is tough.
So your entire post is based on fallacies.

You are a great one for making statements without any reasoning or proof. Again is there any evidence for your opinion?

And now we will see you backpedal, claim I didnt support the statement, or otherwise obfuscate. But the truth is, you've been pwned.
Offshoring creates as many U.S. jobs as it kills, study says

 

[oldfart]

What is ridiculous is to say there is not structural unemployment. There are no jobs in rural American. There are no jobs in the inner city.

I never said structural unemployment did not exist, just that it cannot explain large sudden changes in unemployment. Do you believe that it does? If so, how do you explain the changes in 1940 and in 2009 I referred to?

All this talk of learned dependence is from those who have gained from an 'evolving/changing/structurally different' economy who do not want to assist in providing the means to does who 'have not/can not' adapt, such as those in rural America and the inner city. This country was not built on 'I've got mine, screw you' and we should not start now.

I agree with you. The solution to structural unemployment is a two tier solution. First raise aggregate demand sufficiently to increase the demand for labor so there are more jobs relative to the number of people looking for work and let markets do what they are intended to do. Secondly address specific barriers to labor market mobility. I suggest that in addition to job training and education, both urban and rural labor markets have access problems which transportation policy can address. Affordable child care can also significantly increase access to jobs.

To the right, labelling unemployment as structural is an excuse to do nothing about it; implicitly blaming workers for high unemployment. Structural unemployment can be reduced by public policy to the gain of real growth in the economy at large as well as the workers involved. The only parties that lose are the Leona Helmsley's of the world who bemoan the lack of sufficient "little people" to exploit and shift the burden of taxation to.

 

[oldfart]

And now we will see you backpedal, claim I didnt support the statement, or otherwise obfuscate. But the truth is, you've been pwned.
Offshoring creates as many U.S. jobs as it kills, study says

Did you read the actual paper or only the WP article? It doesn't say what you think it says.

I was responding to your post which was itself a response to a question on a tangential issue, the effect of off-shoring jobs. If you seriously want to defend that off-shoring jobs is a great way to increase employment in the US, by all means start another thread instead of hijacking this one.

 

[The Rabbi]

And now we will see you backpedal, claim I didnt support the statement, or otherwise obfuscate. But the truth is, you've been pwned.
Offshoring creates as many U.S. jobs as it kills, study says

Did you read the actual paper or only the WP article? It doesn't say what you think it says.

I was responding to your post which was itself a response to a question on a tangential issue, the effect of off-shoring jobs. If you seriously want to defend that off-shoring jobs is a great way to increase employment in the US, by all means start another thread instead of hijacking this one.

Yup. I called it.

 

[Rshermr]

And now we will see you backpedal, claim I didnt support the statement, or otherwise obfuscate. But the truth is, you've been pwned.
Offshoring creates as many U.S. jobs as it kills, study says

Did you read the actual paper or only the WP article? It doesn't say what you think it says.

I was responding to your post which was itself a response to a question on a tangential issue, the effect of off-shoring jobs. If you seriously want to defend that off-shoring jobs is a great way to increase employment in the US, by all means start another thread instead of hijacking this one.

Yup. I called it.

Actually, you called nothing. Just proved that you can not make a cogent argument. But then, we all knew that.

 

[SteadyMercury]

What is ridiculous is to say there is not structural unemployment. There are no jobs in rural American. There are no jobs in the inner city.

I can't believe you labeled someone else's statement as ridiculous, then proceeded to claim there are no jobs anywhere.

Just... wow.

 

[william the wie]

Let me make this simpler UE is overwhelmingly a blue state problem. Blaming Rs for taking advantage of D idiocy is dumber than dog squat. If you don't like the results of D policy then stop voting for them. This is not an economic thread this is an apologetic for Dumber party incompetence and corruption masquerading as an economic thread. Sorry 3 to 1 advantages in GDP for red states are not caused by the GOP which is nearly as incompetent and corrupt as the Ds but by Ds striving mightily to be the Dumber of Dumb and Dumber. Apparently I was way too polite and diplomatic in my first post I hope I have corrected that error.