The White House on July 21 extolled the extension of unemployment insurance by the Senate, claiming it was “not only the decent thing to do but one of the most effective ways to boost our economy.” President Obama signed the extension into law immediately, saying that this was “desperately needed assistance to two and a half million Americans who lost their jobs in the recession…Americans who…will finally get the support they need to get back on their feet during these tough economic times.”

Alan Reynolds of the Cato Institute strongly disagrees that such action was “decent” or “effective,” stating flatly that such extension of benefits will not only increase the amount of unemployment in the workforce, but also the length of time those workers will stay unemployed. “When the government pays people 50-60 percent of their previous wage to stay home for a year or more, many of them do just that,” according to Reynolds. “Extending unemployment benefits [is] guaranteed to leave many more people unemployed for many more months.”  

He adds, “The unemployment rate has been rising because unprecedented numbers of those who became unemployed six to 19 months ago are remaining ‘on the dole’ until their benefits are nearly exhausted.” Assistant Secretary of the Treasury Alan Krueger and Bruce Meyer of the University of Chicago, in a 2002 survey, confirmed that “unemployment insurance and worker’s compensation insurance … tend to increase the length of time employees spend out of work.”

Elsewhere, Reynolds points out another flaw in the White House announcement: “Whether the government pays people to work or to stay on the dole, it has to get the money by taxing, borrowing or printing money – all of which reduce [his emphasis] real income and employment opportunities in the private sector. To imagine that borrowing from Peter to pay Paul is a way to create [a job for] Paul is to orget that Peter expects his money back, with interest.”  

There’s another negative impact from the government’s generosity: how long it takes for an unemployed worker to find another job. The Bureau of Labor Statistics just announced that the “median duration of unemployment” is now more than 25 weeks, the highest since the BLS started charting this figure in 1968. Gary North says, “We have not seen anything like this in my lifetime.” He is 71. North adds, “It is likely that this statistic … will go much higher. This is really serious. It means that no one will hire these people. If some people are out of work for a year or more … employers will not want to hire them again…Congress has placed them on permanent welfare.”  

There is another negative, too: These “welfare clients have lost their sense of calling. They used to work. Now they are on welfare. They used to regard welfare recipients as bums and freeloaders. Now they face new careers as bums and freeloaders.”  

Some who have found themselves on unemployment “welfare” have fought their way back. Mike Rogers, in his Confessions from Inside the Welfare State,
discovered that he couldn’t hold down a job and still get good grades in school. Rogers said, “I had to quit my job and devote more time to study. My boss … told me that instead of quitting, he’d have me ‘laid off’ [so that] I could still get paid money from the government.” After completing the paperwork, Rogers said “Finally a check came in the mail. I was stunned. The State of California was paying me more money [emphasis added] a week in unemployment benefits than my former employer … was paying me to work!” Rogers then asked: “What kind of an insane system is that? I felt bad about it … and stopped filing … because I thought it was, frankly speaking, dishonest on my part to do so.”  

In a study just released by Pew Research, there are other negative impacts from long-term unemployment, including workers’ finances, their emotional well-being as well as long term future career prospects. “Major changes” were reported by almost half of those out of work for at least six months, including being in much worse financial shape, suffering strained family relations, and losing contact with close friends. Unemployed workers also lost some self-respect, and many reported having to seek professional help for depression and other emotional issues. For many, their unemployment difficulties have had a “big impact” on their long-term career goals, and many reported changing their careers or at least considering such a change. And long-term unemployment has affected their attitude as well, many reporting being “significantly more pessimistic” about their chances of finding a job as good as the one they lost.  

The Washington Times opined that with each extension of benefits, “the so-called insurance program becomes less and less ‘temporary’ and closer to a typical welfare program intended to encourage permanent dependence on the government.” The Times added: “No nation can thrive on a policy of a debt-fueled redistribution of wealth from the active to the inactive. Only by reducing the crushing tax burden on individuals and businesses will the economy have the room it needs to grow and prosper.”

TrackBack URI for this entry

Comments (11)

Subscribe to this comment's feed

me said:

Feel sorry for them or not On the one hand I feel sorry for these people because I have been unemployed for more than three months, and it's demoralizing. On the other hand, though I had paid into unemployment for over 15 years, because I had worked the previous two years for a Christian school, I was denied unemployment altogether when I was jobless, so I took a awful, poor-paying job and survived until I got a better job. No one took care of me, so why should my money go to take care of these people — many of whom are likely making far more in unemployment than I make working?

July 23, 2010

Nate said:

... What about those who current claim is (TUB) Temporary Unemployment Benefits. Will TUB be extended?

July 23, 2010

Brett said:

free loaders I think a lot of these people are too proud and too egotistical. I seriously believe almost all of them could get jobs as janitors and make some money til they find something better. They can do landscaping, deliver papers, security jobs, food services etc etc. They're too "proud" to stoop that low so the actual landscapers, security guards and waitresses pay taxes to pay them! Ironic.

July 23, 2010

Mikey-Pinkie Rings said:

The saddest part of it is they think they are entitled. I have heard people stating over and over, "I paid into the system, why can't I get my own money back?" It's almost as if they think that all the money they paid into the system was a bank account that they are just now withdrawing from. Bah! It never was and never will be like that. The money we all pay into the system goes to recipients as soon as the money is received by the government.

July 23, 2010

Tony Nolan said:

How sad this recession is I am a husband and father who was laid off due to the economy. I worked 10 straight years at the last company making cabinets. When things got bad they let most of us go. It's hard to survive on unemployment benefits and embarrassing when I have to tell my children we can't afford to go to the fair. I have paid into unemployment for over 30 years and this is my first time using it. I would much rather have a job. Nobody in my area is hiring. I have even put applications in at fast food restaurants. Friends and family look down on me. I am not whining I just want to provide for my family. Unfortunately, I have exhausted my unemployment and an extension does nothing for me. But thank God it's there to help other families who qualify.

July 23, 2010

Dale Evans said:

No Shame for the Unemployed No shame to the people who are unemployed because IMO this is purely intentional. Make as many unemployed as possible. Then get them dependent on the government. Then the government cultivates its squad of eco-green warriors from people who have learned to like government handouts. Then usher in the UN's Agenda 21 program and have the financial oligarchy rule the planet, behind the scenes. That seems to be the plan. When the oligarchy controls every central bank in every country and coordinates the world economy via the Bank of International Settlements (BIS) and the UN's IMF and World Bank, realize these private wealth interests are ALREADY IN CHARGE of the planet, whether you realize it or not.

July 23, 2010

Owner, Lowly rated comment [Show]

Trent said:

Socialism leads to communism BigEd -- Socialism is never good. Historically speaking, socialism generally leads to communism. The reason being that socialist leaders are generally corrupt (as they would be in our case) and when a productive citizen realized the fruits of their labors are being handed to the lazy people in society, authoritarian rule must now force the productive to remain productive -- leading to communism. Communism is bad (if you haven't figured this out already) because the individual has no rights and very little power. Communism represses the individual. So if you like socialism, you better like communism, also.

July 24, 2010

Dandy Dale said:

... What multinational corporation does North represent? He is 71, why doesn't he take his big government pension and let in a younger man with a family? First lets send all the jobs in the US to China, Mexico, Pakistan and India. Then complain that US workers are on unemployment. When the jobs left, the able bodied went into the trades, working in the only industry left in the US, housing. What the complaint is about is a secondary effect, the primary was the deindustrialization of the US by passage of NAFTA by a """Congress has placed them on permanent welfare.”"" In most states, Mike Rogers would have been charged with fraud, if you are in school full time, you are then, "not available for work" and disqualified. I would like to remind you of what was said 20 years ago before the passage by a ""Congress has placed them on permanent welfare."" every dollar spent in this economy goes back through 7 to 11 times. Products that are shipped here come in Chinese container boxes and put directly on the shelf. Is there even a multiplier for that? What to dilute that even more? What do you say about big business inviting in 12 million illegals, and giving amnesty, a pathway to keeping wages stagnant in the US. It will take more than ""Only by reducing the crushing tax burden"" because there are no jobs left, no textile, no steel, no electronics, not even a call center and 25-30% of the automotive. Lets fall into the trap of killing the messenger, when the problem began with the politically correct word of "outsourcing" call it what it is, the deindustrialization of America.

August 01, 2010

Brandi said:

... ALL OF YALL ARE WRONG...I HAVE BEEN UNEMPLOYED FOR A YR N HALF...I HAVE APPLIED FAST FOOD RESTURANTS, GROCERY STORES, REALLY ANYTHING I COULD FIND...STILL NO JOB....IM A SINGLE MOTHER TO A 7 YR OLD....N ALAN REYNOLDS HAS NO IDEA WHAT ITS LIKE TO FIGHT FOR A JOB THAT 200 PEOPLE ARE APPLYING FOR THAT SAME JOB....

August 04, 2010

megan said:

welfare wow i think a lot of people in the world today are selfish,greedy and careless of others and it bothers me.But i do believe those who are wrong to others will recieve whats coming to them good/bad.i am a 18year old single mother who got pregnant umwillingly with no help from a drugee mother and od on heroind deceased dad and depend on welfare because i have no job,i have been applying and looking everywhere for two years prior to my pegnancy.and iam very greatful for welfare and it sure does help the little bit they give me..

August 15, 2010