Does Anyone Believe That Unemployment Would Be Just 6.8% If Obama Hadn't Extended Jobless Benefits?

Business Insider ^ | 08/30/2010 | Joe Weisenthal

[SeekAndFind]

If there's one thing the Wall Street Journal editorial page loves, it's arguments that the extension of jobless benefits creates unemployment by discouraging people to find work.

And so it is today that Harvard economist Robert Barro is out with a new piece arguing that if Obama hadn't extended unemployment benefits, we'd be at 6.8% unemployment and not 9.5%.

How does he arrive at this number? Simple, he just presumes for no reason that the nature of the recent jobless spike is no different than the one seen in the early 80s.

(An examination of unemployment in the early 80s vs. right now was made recently by David Leonhardt in the NYT. He noted that in 1982, 22% of the population experienced joblessness, whereas this time that peaked at 16%).

So anyway Barro just says: Well, unemployment fell fast in the early 80s, when we had a shorter period of being able to collect benefits, ergo, it should be the same now.

SNIP SNIP

This (Barro's argument) is really, really thin, because it presumes that the different lengths of being able to collect unemployment-insurance is the defining difference between now and then. But in 1982 we weren't coming off a massive multi-year bubble. And we're not merely in a post-burst era -- home values are still going down, and construction is at something of a standstill, which means this is an active drag on the economy.

Housing is a powerful predictor of jobs. And sure, it's probably not the only issue, but Barro could at least try to argue why this is not a relevant factor to consider before decrying the jobless benefits that can represent the last barrier between joblessness and total devastation for many families.

[SeekAndFind]

[the invisib1e hand]

No. Anyone who argues that way has never, ever had to live on unemployment.

And to anyone who does, let's just put your ignorant sophistry to down once and for by reminding you that most of us have been paying for this all our lives. We're just now getting some of it back, without interest.

[sam_paine]

Get a job.

[libertarian27]

No, you would have seen a higher rate of people cashing out their 401K’s (the gov’t would love that too - all the taxes and fees rolling in - but that wouldn’t be too swell in an election year)

[GoldenPup]

Does Anyone Believe That Unemployment Would Be Just 6.8% If Obama Hadn't Extended Jobless Benefits?

ABSOLUTELY NOT!! PATENT BULLSH!T

[p. henry]

Speaking anecdotally, my sublessor recently advertised for a temporary position filling in for his secretary who was about to take maternity leave. He made several offers of employment that were declined because a combination of child care costs and unemployment insurance would have exceeded the pay (after tax) that he was offering. Not a significant statistical study, but interesting nevertheless.

[Truth is a Weapon]

Sure, I believe it. Just like I believe that the Stimulus saved 3 million jobs.

[mountn man]

Actually "WE" don't pay for it. The employer pays for it.

But yeah you're right.

But there are SOME truths to it. In Massachussetts, UE for a single person is $625 a week, as opposed to Illinois at $385 a week.

A person might not get rich on $625 a week, but they can make it work for a while longer, than on $385.

I don't see the removal of high UE payments or extensions as lowering unemployment. I do see it in some cases as getting some people back to work just a little quicker.

[Truth is a Weapon]

Also, I suspect there is a rather large amount of unemployment cheating going on. That is where someone is collecting unemployment while doing part time or odd job type of work for cash. No survey to support it just some anecdotal evidence.

[pepperdog]

Does anyone truly believe it’s only 6.8%? No one I know is that stupid.

[luvbach1]

For example: A worker is receiving the equivalent of $10/hr in unemployment benefits (more or less). What incentive does he have to accept a job paying $9/hr more or less)?

[SeekAndFind]

Does anyone truly believe it’s only 6.8%? No one I know is that stupid.

He was quoting Robert Barro of the Wall Street Journal ( Barro's article is also posted at FR ). Here's what Barro said :

---

To begin with a historical perspective, in the 1982 recession the peak unemployment rate of 10.8% in November-December 1982 corresponded to a mean duration of unemployment of 17.6 weeks and a share of long-term unemployment (those unemployed more than 26 weeks) of 20.4%. Long-term unemployment peaked later, in July 1983, when the unemployment rate had fallen to 9.4%. At that point, the mean duration of unemployment reached 21.2 weeks and the share of long-term unemployment was 24.5%. These numbers are the highest observed in the post-World War II period until recently. Thus, we can think of previous recessions (including those in 2001, 1990-91 and before 1982) as featuring a mean duration of unemployment of less than 21 weeks and a share of long-term unemployment of less than 25%.

These numbers provide a stark contrast with joblessness today. The peak unemployment rate of 10.1% in October 2009 corresponded to a mean duration of unemployment of 27.2 weeks and a share of long-term unemployment of 36%. The duration of unemployment peaked (thus far) at 35.2 weeks in June 2010, when the share of long-term unemployment in the total reached a remarkable 46.2%. These numbers are way above the ceilings of 21 weeks and 25% share applicable to previous post-World War II recessions. The dramatic expansion of unemployment-insurance eligibility to 99 weeks is almost surely the culprit.

To get a rough quantitative estimate of the implications for the unemployment rate, suppose that the expansion of unemployment-insurance coverage to 99 weeks had not occurred and—I assume—the share of long-term unemployment had equaled the peak value of 24.5% observed in July 1983. Then, if the number of unemployed 26 weeks or less in June 2010 had still equaled the observed value of 7.9 million, the total number of unemployed would have been 10.4 million rather than 14.6 million. If the labor force still equaled the observed value (153.7 million), the unemployment rate would have been 6.8% rather than 9.5%.

[SeekAndFind]

Sure, I believe it. Just like I believe that the Stimulus saved 3 million jobs.

The author was quoting Robert Barro of the Wall Street Journal ( Barro's article is also posted at FR ). Here's what Barro said :

---

To begin with a historical perspective, in the 1982 recession the peak unemployment rate of 10.8% in November-December 1982 corresponded to a mean duration of unemployment of 17.6 weeks and a share of long-term unemployment (those unemployed more than 26 weeks) of 20.4%. Long-term unemployment peaked later, in July 1983, when the unemployment rate had fallen to 9.4%. At that point, the mean duration of unemployment reached 21.2 weeks and the share of long-term unemployment was 24.5%. These numbers are the highest observed in the post-World War II period until recently. Thus, we can think of previous recessions (including those in 2001, 1990-91 and before 1982) as featuring a mean duration of unemployment of less than 21 weeks and a share of long-term unemployment of less than 25%.

These numbers provide a stark contrast with joblessness today. The peak unemployment rate of 10.1% in October 2009 corresponded to a mean duration of unemployment of 27.2 weeks and a share of long-term unemployment of 36%. The duration of unemployment peaked (thus far) at 35.2 weeks in June 2010, when the share of long-term unemployment in the total reached a remarkable 46.2%. These numbers are way above the ceilings of 21 weeks and 25% share applicable to previous post-World War II recessions. The dramatic expansion of unemployment-insurance eligibility to 99 weeks is almost surely the culprit.

To get a rough quantitative estimate of the implications for the unemployment rate, suppose that the expansion of unemployment-insurance coverage to 99 weeks had not occurred and—I assume—the share of long-term unemployment had equaled the peak value of 24.5% observed in July 1983. Then, if the number of unemployed 26 weeks or less in June 2010 had still equaled the observed value of 7.9 million, the total number of unemployed would have been 10.4 million rather than 14.6 million. If the labor force still equaled the observed value (153.7 million), the unemployment rate would have been 6.8% rather than 9.5%.

[SeekAndFind]

Get a job.

If you can find one.

[Buckeye McFrog]

No, because his policies (and fear of his future policies) is doing too much to kill off any job creation in the private sector. The extended benes just create a bunch of churn around the edges of the “official” rate as people become undiscouraged and then discouraged again.

[BenKenobi]

Some of us refuse to take unemployment.

[DonaldC]

“Some of us refuse to take unemployment.”

Why? Being unemployed and getting the help that was paid into is not evil. Being on it for two years may be but I can’t speak for that situation. Luckily, I have been employed throughout this mess so far.

[Uncle Miltie]

To be fair, Reagan tried to help the economy while 0bama is trying to destroy it.

So unemployment benefit extensions are a smaller component of the whole.

[dalereed]

” by reminding you that most of us have been paying for this all our lives.”

You have never paid one cent for unemployment insurance!

It is 100% paid for by the employer!!!!