President Obama is walking around – I’m sorry, flying around, at taxpayer expense – bragging about how the economy is picking up and we’re creating jobs finally and unemployment is going down and THANK GOD FOR MY POLICIES.
And now comes a new study, touted recently by National Review and today by the Wall Street Journal, that makes the case the jobs were created IN SPITE of Obama and his gloating geniuses on the Council of Economic Advisors.
Very simply the repeated extensions of jobless benefits seem to have suppressed employment, and the termination of the unemployment benefit extensions by Congress at the end of 2013 – derided as heartless and inept by Obama and his Democratic allies – coincided with a substantial pickup in job gains this year.
According to the Wall Street Journal:
Job growth in 2014 was roughly 25 percent higher than any post-2009 year. Joblessness plunged to 5.6% from 6.7%. Net job creation averaged 246,000 a month. What happened?
Assuming that the pre-2014 trends would have continued among the two groups, the authors find that “the cut in unemployment benefit duration led to a 2% increase in aggregate employment, accounting for nearly all of the remarkable employment growth in the U.S. in 2014.” They then confirm these results with a second experiment that compares adjacent counties in different states whose economies are otherwise equal except for their unemployment benefits.
Notably, job growth improved most in states and counties that offered the most generous benefits before Congress took away the punch bowl. This suggests that the extra jobless benefits reduced the incentives for businesses to create jobs and for jobless workers to fill the vacancies.
Paying people not to work means they have less incentive to get on a payroll. More generous benefits also discourage businesses from hiring. Since benefits raise the price at which people are willing to search for work, employers must pay above-market wages in the more generous regions, and respond by creating jobs elsewhere or not at all.
The study actually emphasizes the latter point, that with the cost to hire lowered, businesses started looking for new employees. That the unemployment insurance extensions would have a deleterious effect is exactly what conservatives were arguing, to much opprobrium, in 2013.
One of them wrote:
Long term unemployment under President Obama is at the highest level since at least the end of World War II, threatening to create a permanent underclass of workers who will find it difficult or impossible to obtain jobs in the future. What’s more, Obama’s insistence on repeatedly extending long term unemployment benefits may be fueling the unemployment problem.
A paper released by the Boston Federal Reserve paints a pernicious picture of the problem: Employers seem to be throwing out the resumes of the long-term unemployed and only hiring those who have been without a job for less than six months. Meanwhile, with the guarantee of benefits rolling in, the long term jobless might not be looking aggressively enough for work, the paper states.
Oh yeah, that was me, back in January 2013.
And yet, we were the uncaring jerks.
“I hope a few reasonable and empathetic Republicans will join my colleague from Nevada, Sen. Heller, and help us advance this bill,” said Senate Majority Leader Harry Reid about legislation to extend unemployment benefits in 2013. The was the extension that finally didn’t pass.
National Economic Council Director Gene Sperling gave one of his typically plaintive performances in the briefing room, as I wrote in 2013, lamenting, “today and tomorrow are the days that the 1.3 million Americans will find their temporary lifeline not in their mailbox.”
Aww. Instead, they’re finding a paycheck in their mailboxes.
Obama even appeared last January at the White House accompanied by a few poor unemployed souls whose job searches somehow took them to the East Room:
And getting people back on the job faster is one of our top priorities. But I have to confess, last month, Congress made that harder by letting unemployment insurance expire for more than a million people. And each week that Congress fails to restore that insurance, roughly 72,000 Americans will join the ranks of the long-term unemployed who have also lost their economic lifeline.
And for our fellow Americans who have been laid off, through no fault of their own, unemployment insurance is often the only source of income they’ve got to support their families while they look for a new job. So when Erick was out of work, it’s a lot harder to look for work if you can’t put gas in the gas tank, if you’re worried about whether there’s food on the table for your kid. If Mom isn’t making the rent and paying her phone bill, it’s a lot harder for her to follow up with a potential employer. Unemployment insurance provides that extra bit of security so that losing your livelihood doesn’t mean you lose everything that you’ve worked so hard to build. And that’s true whether you’ve been out of work for one month or six months.
Here’s the essential difference between the liberal and the conservative mindset. Obama thinks not having the cash provided by welfare makes it “a lot harder to look for work if you can’t put gas in the gas tank, if you’re worried about whether there’s food on the table for your kid.” Conservatives have another idea: These problems actually make it a lot easier. I mean, who is going to ignore their alarm clock and miss the interview if they’re out of money?
Honestly, I vote for making this woman the chairman of Obama’s Council of Economic Advisors. I’m not joking. She has a better economic program than any I’ve heard out of this administration. It’s called the STOP BEING LAZY AND GET A JOB initiative.