"As long as we are not chased from our words we have nothing to fear. As long as our utterances keep their sound we have a voice. As long as our words keep their sense we have a soul." -- Edmond Jabes, from The Book of Yukel, Return to the Book

Monday, September 21, 2009

Helping the unemployed

Wall Street may think we're coming out of this recession, but there are millions of workers who may disagree. That's why Congress is considering another extension of unemployment benefits that "would provide 13 weeks of extended unemployment benefits for more than 300,000 jobless people who live in states with unemployment rates of at least 8.5 percent and who are scheduled to run out of benefits by the end of September." The extension "would supplement the 26 weeks of benefits most states offer and the federally funded extensions of up to 53 weeks that Congress approved in legislation last year and in the stimulus bill enacted last February."

This seems a no-brainer. This recession has been pretty hard on workers, leaving about 15 million out of work, and millions more working but facing pay cuts, furloughs or in part-time or temporary jobs.

Just as important is the number who are facing long-term unemployment.
Some 5 million people, about one-third of those on the unemployment list, have been without a job for six months or more, a record since data started being recorded in 1948, according to the research and advocacy group National Employment Law Project.

"It smashes any other figure we have ever seen. It is an unthinkable number," said Andrew Stettner, NELP's deputy director. He said there are currently about six jobless people for every job opening, so it's unlikely people are purposefully living off unemployment insurance while waiting for something better to come along.

Gary Burtless, a senior fellow at the Brookings Institution, said at the Finance Committee hearing that, according to Labor Department figures, 51 percent of unemployment insurance claimants exhausted their regular benefits in July, the highest rate ever.

"It is likely the exhaustion rate will continue to increase in coming months" as the unemployment rate continues to rise, he said.

The reality is that, without the extension, many workers likely would need to use other social services or go without. Putting money in their hands is good policy -- workers are going to spend what they receive -- and the right thing to do.


Anonymous said...

Yeah, because having the unemployed spend money on PSE&G or Verizon is really going to boost the economy. This is about survival. It's about food, heat and getting your kids together. You're missing the poing.

Geoff said...

Anonymous, do you really think anyone's saying it's not about survival? Or is your spelling of "point" meant in mockery of people who would make that argument?

(I'm not being sarcastic - I'm sincerely interested!)

Anonymous said...

This line, in a column about a strugling and possibly rebounding economy implies that it is more about stimulus than necessities.

"Putting money in their hands is good policy -- workers are going to spend what they receive -- and the right thing to do."

It is at best out of place in this column and serves only to diminish what he was trying to say, or, what the two other columnists were tryng to say.

P.S. I thought typos were acceptable here, judging from some of the copy.

Hank Kalet said...

Unemployment is designed to help people as they seek other work -- to allow them to pay their bills, of course, but also to buy the things they need to get by and maybe a little more. They will use the money for utilities and phone bills, but also to buy milk, bread and eggs, make repairs to their cars, buy clothing, etc., things that do pump money into the economy.

reinkefj said...

"Unemployment is designed to help people as they seek other work"

Herb, herb, herb, typically muddled "liberal" (not classical liberal) left thinking.

"UNEMPLOYMENT" is the invisible hand of the marketplace telling you that it doesn't "think" it needs what you are selling. You then have some choices. Seek other ways to server your fellow man. For which service, the marketplace will award, or reward, you suficient "Certificates of Appreciation" to reinforce that you are doing "good".

Thus, "unemployment" is designed to TELL people to seek other work!

Unlike a beehive, we need the individual bee to figure out how to make their contribution to "the hive". We've discovered that cooperation (i.e., division of labor) makes "prosperity" (i.e., support a larger number of people). "Subsistence farming", as opposed to "division of labor", which is in vogue in Africa, is less prosperous.

Since humans take direction very badly unless very motivated, it has been found that "liberty" seems to be a very good strategy to get those pesky humans to "produce". It's all very messy. And, has all the appearances of chaos. But, like a crowded city street, it does have the result of getting everyone where they want to go. With a minimum of friction.


Unemployment is a necessary evil to motivate those pesky humans.

On the other hand, "unemployment insurance" is a gooferment program that PREVENTS humans from engaging in a host of beneficial behaviors. Saving, planning, training, ... just to name a few. That bad gooferment program steals from every WORKER to REWARD unemployment. Also, the gooferment has bureaucrats to administer this supposed "insurance" program. (Note that insurance is for those semi random things that are beyond the individual's control. Like a hurricane, flood, or other natural disaster. Unemployment is NOT unforseeable, NOT random, and NOT beyond the individual's control.)

Imagine if there was NO gooferment unemployment insurance, then workers would save for the future. Those savings would provide capital to the marketplace for growth.

It's hard to underestimate the damage that these so called "insurance" programs do to the people and the economy. It trains people to look to Mommy Gooferment to "save" us. The gooferment creates the problem and then rushes in to "save" us. Often making the problem much much worse.

Sigh, today's left liberals have to learn that it is only by VOLUNTARY participation do we secure the blessings of liberty for ourselves and our posterity. (Think I've read that somewhere.) Keep your gooferment "solutions". There's a reason that African, seeking to emigrate here, to "the land of fat poor people".

Geoff said...

Reinkefj, your excessive use of scare quotes makes it very hard to decipher what it is you're trying to say, but it seems like you're making a very paternalistic argument, and those are usually attributed to liberals.

Anyone who has been on unemployment (as so many of us journalists have) knows it's not getting anybody rich. In the best-case scenario, it's just barely enough to get by. It's not a reward for laziness, but rather a stipend to keep people from defaulting on payments, getting sick, or going hungry, and it's obviously in the best interest of the common good.

Anonymous said...

I don't have the words to express my utter contempt and loathing for libertarianism and especially the brand of radical libertarianism as expressed by the resident Ron Paul acolyte.
Notice how reinke assumes that the unemployed are lazy bums who don't save for the future. There's a nice assumption, where's the data for that other than libertarian knee jerk smugness.
Libertarianism is a soulless heartless robotic ideology not practiced anywhere on this earth. It might work in a tiny village with a very homogeneous population.
Libertarians are impervious to reality and decent humanity. Just let the unemployed along with the uninsured rot in the gutter; that's the magic of the marketplace. That'll teach them for not having saved for that rainy day, the worst economic meltdown since the great depression.

reinkefj said...

@Geoff "a stipend to keep people from defaulting on payments, getting sick, or going hungry, and it's obviously in the best interest of the common good."

No, it's NOT a stipend. It's an ILLUSION. You pay and pay into an "insurance" policy that you then have to go hat in hand to a bureaucrat to grant you your money back. Why couldn't you KEEP your "insurance premiums" and self-insure your own "unemployment"?

You can't because it's a WELFARE scheme. Designed to make you obligated to politicians and give jobs to the friends and relatives of the politicians.

It's not intended to keep you from "getting sick or going hungry". There's Medicaid and Food Stamps for that. It's intended to keep peopel from realizing they have to fend for themselves. From building up their reserves, their familial wealth, their Fraternal, their Charitable, their Church connections.

We can't just STOP anything in five minutes. People have planned their lives based on certain assumptions. For example, we need to "wean off" these things.

But, the old Wall Street canard is "When you're in a hole, stop digging."

Psuedo-insurance programs -- unemployment, SOcial Security, Medicare, etc. etc. -- need to have an unwinding strategy.

Chile has a fully privatized Social Security system that they moved to in the Seventies. (With a largely ILLITERATE population.) Their government's role is as a very strict referee. TO keep the books honest. Like a bank examiner. NOT as a PARTICIPANT.

The only legitimate role for the Government is to protect the people from force or fraud. When it tries to do more, it fails/

reinkefj said...

*** begin quote ***
Notice how reinke assumes that the unemployed are lazy bums who don't save for the future.
*** end quote ***

No, what I was saying is that the gooferment SEIZES the "premium" from the workers that would have been avail for them to SAVE as they see fit. Any economic study I've seen of gooferment insurance programs cite negative real rates of returns and transaction costs that exceed the usual insurance company costs. (Even adding in the insurance company profit.)

If people are allowed to manage their own lives, they will do better and be happier WITHOUT the gooferment messing with them.


reinkefj said...

*** begin quote ***
Libertarians are impervious to reality and decent humanity. Just let the unemployed along with the uninsured rot in the gutter; that's the magic of the marketplace. That'll teach them for not having saved for that rainy day, the worst economic meltdown since the great depression.
*** end quote ***

No, Libertarians are honest about not want to screw people. Charity is voluntary. It's also shows itself much better at really helping people. We need to be honest that the government is NOT the answer to every problem. In fact is usually at the root of every social problem.

Anonymous said...

Oh please, offering up Chile's failed experiment with a privatized Chilean version of Social Security. It was a failure and it still is a failure. Privatized SS is a boon to the rich and privileged but the poor and the middle class got screwed. Thatcher privatized and destroyed the British pension system. It was an absolute disaster for working class people. Thatcher did not dare privatize the National Health Service, the Brits would have run her out of the UK. Thatcher was an economic disaster for England, she was saved by her performance during the Falkland war.
The fascist dictator Pinochet forced and imposed a privatized pension system on Chile, it's not as if there was any choice, discussion or dialogue. Looks like Pinochet was a brutal libertarian dictator? Libertarians seem to salivate and go ga-ga over Pinochet. How interesting.
Mr. Libertarian seems to think that charity is the panacea and silver bullet for all our problems. Tens of millions uninsured and under insured? Just get charity. Millions unemployed? Just call for charity. Ha, ha, ha, too funny.
Are there not charities, are there not debtors prisons? In other words, I have mine and I don't care about anybody else, so just buzz off and beg for alms.

Anonymous said...

Social insecurity

In any given month, only about half of Chileans with personal retirement accounts contribute to them. And most participants had accumulated less than $3,500 as of September 2004.

Chilean workers' participation in private accounts

Not contributing: 51%

Contributing: 49%

Breakdown of private accounts by size

$3,481 or less: 59%

$3,482 to 8,702: 19%

$8,703 to $17,403: 11%

More than $17,404: 11%


Source: Chile's Superintendent of Pension Fund Administrators

Los Angeles Times

Inelia Pardo Acevedo recently retired.

But the 64-year-old plans to look for a part-time job to pad the nest egg in her personal retirement account. The $225 a month she draws under Chile's privatized system doesn't stretch far. And what galls her is that colleagues who stuck with traditional pension plans get three times as much, guaranteed for the rest of their lives.

The government "painted this wonderful picture of private accounts," Pardo said. "They fooled me. They fooled us all."

But high management fees have trimmed retirees' payouts substantially, while big holes remain in Chile's safety net. An estimated half of the nation's workers aren't saving enough to qualify for even a minimum government pension of about $134 a month. The transition has been brutal for the first wave of retirees such as Pardo, many of whom made the change too late in their careers to reap the full benefits of compound interest.

Opinion polls show that most Chileans are skeptical of their pioneering reform.

"Millions of Chileans would go back to the old system if they could," said Manuel Riesco, director of the National Center for Alternative Development Studies, a Santiago think tank critical of Chile's reform.

"They promised us gold and riches," said Maria Quintanilla Carvajal, 63, a government secretary who rued the day that she left her guaranteed-benefit plan to invest on her own behalf.

Quintanilla and hundreds of thousands of Chileans approaching retirement age are finding that they would have been better off remaining in the old system. The gap stems mainly from the way some workers' recognition bonds were calculated, resulting in lower benefits at retirement. Workers have formed an advocacy group that is pressuring the government to compensate them for their pension damage.

Anonymous said...

Chile's Privatization Failures:
From a study by The Century Foundation4/26/2005:

A closer look at the Chilean system's performance over the past quarter century, however, reveals high management fees, low participation rates, unexpectedly heavy dependence on an inadequate safety net, and prohibitively high costs to government. This has led to largely disappointing results, leaving many Chilean workers with no reliable retirement plan.
There are prohibitively high expenses and fees. Voracious commissions and other administrative costs have swallowed up large shares of personal accounts. It is estimated that roughly 28 to 33 percent one-quarter to one-third of contributions made by employees retiring in 2000 went toward fees.

Half of Chileans, primarily the poorest, do not contribute to a pension fund at all. The New York Times notes, "Many [Chileans]—because they earned much of their income in the underground economy, are self-employed, or work only seasonally—remain outside the system altogether. Combined, those groups constitute roughly half the Chilean labor force. Only half of workers are captured by the system."
Even the military does not participate in the privatized system. While the military imposed the private accounts on all other workers entering the labor force after 1981, it continues to receive pensions under the old, favored governmental system.