Paid Not to Work
Four-year price tag for extra jobless benefits: $200 billion.
FEBRUARY 16, 2012
President Obama is crowing that the unemployment rate is fallingâto 8.3% in Januaryâbut he and his party are still insisting as part of the payroll tax deal that payments to the jobless must increase again. So add on another $30 billion or so to the $200 billion that this extra "unemployment insurance" has already cost since the recession.
Jobless payments typically end after 26 weeks, with some states providing longer benefits. The idea is that these payments should assist a worker who loses a job during a transition to finding new work, instead of becoming a semi-permanent sinecure.
But for the last three and a half years those paymentsâabout 35% to 40% of the worker's last pay checkâhave been extended eight times to an all-time high 99 weeks in many states. So now taxpayers pick up the check for as much as two years of not working, even as jobs become easier to find.
Republicans are at least trying to reform this de facto welfare program. The House wanted to cut the time limit to a still-generous 59 weeks, while Senate Democrats demanded 93. The tentative deal that may be voted on this week reduces that to 63 weeks for those states with a jobless rate at the national average or below. States with a rate above 9%âthere are now 17âwould be eligible for a maximum of 73 weeks.
The House also seems to have won some minor new conditions on those benefits. One reform would let states screen for illegal drug use. Another would require the long-term unemployed to undergo a job-eligibility review to assess what they need to return to work. This process could turn into one more phony bureaucratic test, but it might also cause some unemployed to enhance their readiness to return to the work force.
Democrats resisted even these requirements, and they reject the idea that these benefits discourage recipients from finding a job until after the checks stop. But nearly every study reveals the oppositeâthat extending benefits extends the length of time that people stay unemployed.
Two of President Obama's most senior economistsâformer White House aide Larry Summers and current Council of Economic Advisers chairman Alan Kruegerâhave published studies documenting this antiwork incentive. According to a study co-authored by Mr. Krueger in 2002: "Higher and longer duration UI benefits will cause unemployed workers who receive UI to take longer to find a new job."
This is surely one reason that the share of the jobless out of work for six months or more is still 42.9%. Democrats have kept the jobless rate higher for longer by trying to turn jobless insurance into a long-term entitlement. Democrats have also burdened state budgets with higher costs that they will have to make up with higher payroll taxes on business. This will slow the rate of business rehiring.
Republicans deserve credit for trying to stop this madness, which is unfair to the millions of Americans who work, especially those who may take a job at lower pay because they don't want to sit on the dole. The faster jobless insurance returns to 26 weeks, the better for employers, employees and the unemployed.
http://online.wsj.com/article/SB10001424052970203824904577217792498104980.html?mod=googlenews_wsj
Four-year price tag for extra jobless benefits: $200 billion.
FEBRUARY 16, 2012
President Obama is crowing that the unemployment rate is fallingâto 8.3% in Januaryâbut he and his party are still insisting as part of the payroll tax deal that payments to the jobless must increase again. So add on another $30 billion or so to the $200 billion that this extra "unemployment insurance" has already cost since the recession.
Jobless payments typically end after 26 weeks, with some states providing longer benefits. The idea is that these payments should assist a worker who loses a job during a transition to finding new work, instead of becoming a semi-permanent sinecure.
But for the last three and a half years those paymentsâabout 35% to 40% of the worker's last pay checkâhave been extended eight times to an all-time high 99 weeks in many states. So now taxpayers pick up the check for as much as two years of not working, even as jobs become easier to find.
Republicans are at least trying to reform this de facto welfare program. The House wanted to cut the time limit to a still-generous 59 weeks, while Senate Democrats demanded 93. The tentative deal that may be voted on this week reduces that to 63 weeks for those states with a jobless rate at the national average or below. States with a rate above 9%âthere are now 17âwould be eligible for a maximum of 73 weeks.
The House also seems to have won some minor new conditions on those benefits. One reform would let states screen for illegal drug use. Another would require the long-term unemployed to undergo a job-eligibility review to assess what they need to return to work. This process could turn into one more phony bureaucratic test, but it might also cause some unemployed to enhance their readiness to return to the work force.
Democrats resisted even these requirements, and they reject the idea that these benefits discourage recipients from finding a job until after the checks stop. But nearly every study reveals the oppositeâthat extending benefits extends the length of time that people stay unemployed.
Two of President Obama's most senior economistsâformer White House aide Larry Summers and current Council of Economic Advisers chairman Alan Kruegerâhave published studies documenting this antiwork incentive. According to a study co-authored by Mr. Krueger in 2002: "Higher and longer duration UI benefits will cause unemployed workers who receive UI to take longer to find a new job."
This is surely one reason that the share of the jobless out of work for six months or more is still 42.9%. Democrats have kept the jobless rate higher for longer by trying to turn jobless insurance into a long-term entitlement. Democrats have also burdened state budgets with higher costs that they will have to make up with higher payroll taxes on business. This will slow the rate of business rehiring.
Republicans deserve credit for trying to stop this madness, which is unfair to the millions of Americans who work, especially those who may take a job at lower pay because they don't want to sit on the dole. The faster jobless insurance returns to 26 weeks, the better for employers, employees and the unemployed.
http://online.wsj.com/article/SB10001424052970203824904577217792498104980.html?mod=googlenews_wsj