You may have heard on the news this morning that the Senate DID NOT approve a spending bill that would have appropriated funds to extend unemployment benefits. For those who are currently without work this news is likely concerning. For those who are concerned about the mounting government deficit this news is probably reassuring. Regardless of your position on this particular issue I found THIS ARTICLE in the Economist magazine last week and thought I would share it. The article makes the argument that stingier unemployment benefits encourage out-of-work citizens to get more creative inf finding a new job. Critics would argue, however, that the expiration of unemployment benefits marks the end of consumer demand funded by those benefits. Nevertheless, the article makes and interesting argument. Here are some excerpts:
*America’s UI payments are usually stingier and more short-lived than their equivalents in Europe and Canada. That is not necessarily a bad thing: it is one reason why America’s unemployment rate is also usually lower.
*In theory, more generous payments discourage some of the unemployed from taking jobs right away, while encouraging some who might have given up the search to keep looking—and thus be counted as unemployed. JPMorgan Chase estimates that this may have raised the unemployment rate by 1.5 percentage points.
*Two researchers at the Federal Reserve Bank of San Francisco found that jobless workers who qualify for benefits have been unemployed, on average, only 1.6 weeks longer than those who don’t. They reckon that the more generous payments have raised the unemployment rate by only a mere 0.4 percentage points.