Another thought occurred to me after reading Arnold Kling quote from my previous post (as a reminder):
Today, we take specialization and trade for granted. We get ticked off when the government “fails to create jobs.” Yet the unemployed do not revert to growing their own food, sewing their own clothes, and dipping their old candles.
Not only do unemployed not revert to providing the basic necessities, but we really don’t expect much out of the unemployed in exchange for the money they receive. In fact, I can well imagine that the mere suggestion that those receiving unemployment benefits produce something of value in exchange for those benefits would be offensive to some.
I’m not sure exactly what that something of value might be. Perhaps it would be something structured like community work that doesn’t get done without volunteers or maybe it would be unstructured like knocking on doors and asking if anything can be done (“Hello! Do you need your windows washed or lawn mowed? It’s free for you today because I’m on unemployment.”)
But, just thinking through that makes me think of all the potential conflicts and complaints. Unions might bristle if any of the community service work overlaps with their job description and who’s responsible for shoddy work or worse?
Which gets back to the title of this post. We can afford to pay people not to work. That’s a sign that we’re pretty well off.
I highly recommend John Stossel’s excellent one-hour special from Saturday evening on the FoxNews Channel.
The focus of one of Stossel’s segments was the incentives around unemployment benefits. He interviewed people who said they passed up jobs because the jobs paid less than they made on unemployment and they became more serious about looking at such jobs within a few weeks of their unemployment running out.
He also interviewed people who worked for the agency in charge of tracking the unemployed to ensure they were looking for work. They said they could tell that some applicants didn’t take some jobs seriously. They were interviewing in order to check the box to satisfy their requirement to keep receiving unemployment.
Stossel included footage of our President saying that he hasn’t met a single American that would rather collect an unemployment check than have meaningful work to provide for their family. Given Stossel’s evidence, it makes me wonder how hard the President looked or what questions he asked when he did look.
While watching the segment, the thought occurred to me that perhaps unemployment benefits should end once the person has been offered a job, even if the job pays less than the unemployment benefits. Made me wonder what the true goals of unemployment are. Is the goal to provide a safety net or to preserve a lifestyle that may not be preservable?
Here are some good snippets from the Wall Street Journal Weekend Edition. First, from an opinion piece called, Employers on Strike:
The private economy—that is, the wealth creation part, not the wealth redistribution part—gained only 41,000 jobs, down sharply from the encouraging 218,000 in April, and 158,000 in March.
There were some slivers of good news in the May jobs report. For those who have jobs, the average work week rose by 0.1 hours to 34.2 hours and earnings nudged upward by 0.3%. Manufacturers added 29,000 workers, and their hours worked jumped 5.1%, the best since 1983.
Perhaps this is what White House chief economist Christina Romer was looking at yesterday when she cited “encouraging developments” in the jobs market and “continuing signs of labor market recovery.” We doubt this was the private reaction in the Oval Office, whose occupant was told by Ms. Romer and economic co-religionist Jared Bernstein that the February 2009 stimulus would kick start a recovery in growth and jobs.
Imagine if Ms. Romer had instead promised in 2009 that Congress could spend nearly $1 trillion, and 16 months later the unemployment rate would be nearly 10% and that more than 2.5 million additional Americans would be without jobs. Would Congress have still spent the cash? Well, sure, Congress will always spend what it can get away with, but the American public would have turned against the stimulus even faster than it has.
Congress raised the minimum wage to $7.25, pricing more workers out of jobs. The teen unemployment rate rose to 26.4% in May, and for those between the ages of 25 and 34 it rose to 10.5%.
I added the italics.
Nice work. If the message wasn’t clear, Obama’s economists don’t know what they’re doing.