Would Extending Jobless Aid Make Unemployment Worse?


For the millions of Americans currently unable to find jobs, Thursday's vote by the House of Representatives to extend jobless benefits was a largely symbolic gesture because the Senate version remains stalled. As Congress heads into next week's vacation, no relief will be forthcoming for the millions whose benefits have already expired or will in coming weeks.

Senate Majority Leader Harry Reid (D-Nev.) has said he will take up the bill after the July 4 recess. On Wednesday night, Reid fell one vote short of reaching the 60 needed to defeat Republican senators who have prevented the bill from reaching an up or down vote.

The measured unemployment rate is 9.7%, or 15 million people, double what is considered healthy. As many as 10 million more are underemployed -- part-time workers, for example, who would like to work more -- or have given up on the job search altogether.

GOP Senators Block Bill

Senate Republicans have refused to let the measure reach the floor because, they say, the bill would further add to the public debt. And it would, by $33 billion. Since 2000 the national debt has more that doubled.

Republicans blame Democrats for the bill's failure. "The only reason the unemployment extension hasn't passed is because Democrats simply refuse to pass a bill that doesn't add to the debt," said Senate Republican leader Mitch McConnell of Kentucky.

Some Republicans also say extending benefits actually makes unemployment worse because, they argue, it reduces the need for people to go out and find jobs. "Continuing to pay people unemployment compensation is a disincentive for them to seek new work," Sen. Jon Kyl (D-AZ) said earlier this year.

Democrats have jumped all over the "disincentive" claim, arguing that with jobs so scarce as the economy struggles to emerge from the recession, people need help. "For every job available, there are five unemployed workers," said House Ways and Means Committee Chairman Sander Levin. "This issue is fundamentally an emergency for our country and our economy."

Democrats argue that the actual benefits are so low that they don't induce people to not look for work. The average unemployment benefit in the U.S. is $293 per week, according to a recent study. To receive jobless aid, unemployed people must show they are looking for work.

More Long-Term Unemployment

The length and depth of recession have dramatically increased the ranks of the long-term unemployed, or those who have not been able to find work for over 27 weeks, according to government figures. A 2009 report from the Bureau of Labor Statistics found that 6 out of 10 unemployed people fit that category -- "by far the highest proportion of long-term unemployment on record, with data back to 1948."

"Declines in successful job search and longer periods of unemployment are expected outcomes from such a severe job market downturn," the BLS said. "Overall, the rate of successful job search (unemployed to employed) plummeted. In 2009, only 17% of all the unemployed in one month found jobs by the next month, compared with about 28% of the unemployed in 2007."

"Unemployed older workers were the least likely of all to find jobs," the study found, "with only about 15% of jobseekers finding jobs each month in 2009, compared with about 22% in 2007."

Deconstructing the "Disincentive" Debate

Neil H. Buchanan, a Visiting Scholar at Cornell University points out that both parties are in the throes of election year politics. But in economic terms, Buchanan argues that extending the benefits would ease the hardship of the unemployed as well as boost the broader economy -- because cash-strapped recipients will immediately spend the money on necessities like food and rent. This business activity will help many small businesses survive the recession and prompt more hiring.

Buchanan says that the severity of the unemployment crisis renders the "disincentive" debate moot. "It's not even a meaningful discussion to argue about whether people are disincentivized from seeking jobs when the work just isn't there," Buchanan said in an interview. There are so many people looking for jobs that don't exist, Buchanan argues, that the "disincentive" argument doesn't apply because the number of people looking for work dwarfs the number of available jobs.

In an article published Thursday, Buchanan wrote: "The millions of unemployed Americans do not need further incentives to look for jobs. The economy needs spending to prevent even greater damage to the country. Cutting off unemployed workers now is both foolish and inhuman. And providing continuing benefits shouldn't even be a difficult policy choice; it should be a no-brainer, something on which we all can easily agree."