Unemployment Benefits Create Jobs Say Hoyer and Pelosi

On November 30, 2011, The Wall Street Journal said this: Senior aides to both parties confidently predict that the emergency benefits for the long-term unemployed, which are due to expire December 31, 2011, will be extended. Democrats rallied Wednesday, November 30, 2011, to call attention to the impending lapse of the emergency unemployment benefits, which have allowed the long-term jobless to receive income support for up to 99 weeks. They argued that it would be unfair and unprecedented to allow that aid to lapse while unemployment remains high. “In 31 days, time will run out for millions and millions of Americans who are counting on this Congress to extend their unemployment benefits,” Labor Secretary Hilda Solis said at Wednesday’s press conference. “Some lawmakers say that we can’t afford to extend unemployment benefits and the payroll tax in the current fiscal environment. I say we can’t afford not to.” Last year an extension of unemployment insurance squeaked through in December as Democrats and Republicans agreed to extend up to 99 weeks of federal benefits through 2011. From the Bureau of Labor Statistics, we learn that, in November, 2011, 5,618 (thousand) people were unemployed for 27 weeks or longer, or 44.5% of the unemployed. (Not seasonally adjusted)

We see that, while Democrats are quite vocal, Republican leaders in both the House and Senate have expressed support for continuing unemployment benefits. “We’re going to be discussing between the House and Senate ways to deal with both continuation of the payroll tax reduction and unemployment insurance extension before the end of the year,” Sen. Mitch McConnell (R-KY) said.

Congress is about to decide whether to renew unemployment benefits for the long-term jobless. Unless it acts by December 31, 2011, millions who have been unemployed for more than six months will begin losing benefits. Several members of Congress suggest that eliminating benefits for the long-term unemployed will force millions of Americans back to work and reduce unemployment. This article lists five “myths” about unemployment, cited in a study by Dr. Carl Van Horn, a professor at Rutgers University.

1. All unemployed workers receive it.
2. Unemployment insurance payments are close or equal to a person’s former income.
3. Unemployment insurance benefits discourage recipients from looking for work.
4. Unemployment Insurance recipients are waiting for the perfect job and turn down job offers to collect benefits.
5. Unemployment insurance benefits increase unemployment.

Article conclusion: Extend unemployment benefits: When the stimulative economic effect of benefit spending is taken into account, payments lower the unemployment rate because the money people receive from benefits is spent on necessities such as food, clothing and housing. There are two fundamental problems with this article. (1) Dr. Van Horn’s study relies entirely upon survey results rather than empirical data. (2) The article is based entirely on Dr. Van Horn’s research. What else could it say or conclude?

So here comes the unbelievable part.

First, House Minority Leader Steny Hoyer (D-MD) said on Tuesday, December 6, 2011, that extending unemployment benefits will allow the unemployed “to continue participating in growing the economy and creating jobs.” Hoyer actually said that. Using that “logic,” we should ALL become unemployed so we can grow the economy and create jobs. Wait, that won’t work – someone must work in order to pay unemployment benefits.

Second, from former House speaker Nancy Pelosi (D-CA), we get a specific number of jobs that will be “created” if unemployment benefits are extended – 600,000. Pelosi actually said that. She also said that the money from unemployment benefits creates a “safety net” for the U.S. economy because it “injects demand into the economy – creating jobs.” I think that she is using the same “logic” as Hoyer. Pelosi continued, “The unemployment insurance extension is not only good for individuals. It has a macroeconomic impact. As macroeconomic advisers have stated, it would make a difference of 600,000 jobs to our economy.” Pelosi did not name those “macroeconomic advisers.”