Wednesday, January 28, 2015

Latest Study Indicated Reducing Length of Unemployment Benefits Lead to Greater Levels of Employment in 2014.

by Robert Janicki

Something happened in 2014 that conservatives understood and pushed for, but liberals decried as draconian.  I'm talking about cutting off long term unemployment benefits in order to actually stimulate employment.  Long term unemployment benefits were reduced at the end of 2013.  2014 subsequently saw greater employment numbers.  Coincidence?  Not in my book or that of many conservatives.

Liberals decried such Republican action of reducing long term unemployment benefit periods as uncaring and typically characterized Republicans, and especially conservatives, as Neanderthals willing to see men, women and children starve to death as a result of cutting off long term unemployment benefits.  Of course that didn't happen.  

Conservatives have long said that long term unemployment benefits only contribute to long term unemployment, as the unemployed become much more comfortable in picking and choosing employment possibilities, knowing that they have a long term security blanket to fall back on.  

Now comes this latest study that appears to reinforce the conservative belief that cutting the length of long term unemployment benefits actually contributes to reduced unemployment, or, conversely to increasing employment, as more people move to get serious about gaining employment.

This shouldn't come as a surprise, since human nature is to go along with the path of least resistance.  It's difficult to resist unemployment benefits, when more than half the states provide unemployment benefits equal to or greater than what the private sector pays employees on average.

It's interesting to note that the red states that had better rates of employment, concurrently had lower unemployment benefits for a shorter period of time.  There is more than a correlation here.

"A new study attributes the 2014 jobs boom to the expiration of long-term unemployment benefits in late December 2013, a controversial event that Democrats and President Obama warned would hurt workers suffering in the wake of the recession.
Roughly 1.8 million additional jobs were created in 2014 because Congress allowed benefits for workers unemployed 27 weeks to expire, according to the paper published by the National Bureau of Economic Research Monday..." Read More

My take away is that people in general will be much more willing to take advantage of unemployment benefits that are closer to what they might earn when employed.  Why work when benefits are at or above what a person could earn in the local labor market?  Of course liberals will decry this latest study as some perverse conservative plan to crush the poor and destroy the middle class.  This is a given response from liberals.  Conservatives are evil, liberals are world class philanthropists (with other people's money) and really do care about people.  That thought, along with a five dollar bill, will get you a cup of coffee at Starbucks. 

This latest study may not be the most definitive study to date on the negative effects of long term unemployment benefits, but conservative economists believe that subsequent studies will validate this latest finding.  Smaller studies have indicated that those dropping off long term unemployment benefits had a greater rate of reemployment than any other group of unemployed job hunters.