MacroScope

No good deed goes unpunished

February 18, 2010

Here’s another one for the list of unintended consequences . The U.S. Federal Reserve thinks extending jobless benefits to cover Americans out of work for long periods of time may have added 1 percentage point or more to the jobless rate.

In order to qualify for U.S. unemployment benefits, you have to be looking for a job. You also have to be looking for a job in order to be counted among the unemployed. If you give up the search , you move over to the “discouraged workers” category, which has grown rapidly in the past year.

Congress has repeatedly extended jobless benefits during this recession — an increasingly pressing need now that the average duration of unemployment is 30 weeks.

Here’s what the Fed said about this in its latest minutes:

“The several extensions of emergency unemployment insurance benefits appeared to have raised the measured unemployment rate, relative to levels recorded in past downturns, by encouraging some who have lost their jobs to remain in the labor force. If that effect were large — some estimates suggested it could account for 1 percentage point or more of the increase in the unemployment rate during this recession — then the reported unemployment rate might be overstating the amount of slack in resource utilization relative to past periods of high unemployment. “

Comments
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What ever.

If unemployment covered people while they were going to school or looking for work there would be a lot less unemployment. People bemoan the cost but fail to see that a person who is given the resources to retool and improve their skill set is an asset to the economy and turns into a tax paying contributor. We think nothing of giving billions to banking sector to keep it afloat because of its importance to the economy. Yet there IS NO ECONOMY without cash generating citizens. Unemployment should be changed to allow for coverage as long as a person is looking for work or going to school. You make investments where the investments make the most sense. The government is a public institution charged with serving the citizenry.

Unemployment benefits need to be extended and the system needs to be overhauled for its lack of efficiency poor customer service and horrendous turnaround times. I’ve known people who had to pull out their entire retirement savings just to survive the nearly five months it took for their unemployment claim to be processed and accepted. Investing in the citizenry is NOT wrong. It’s good business because its good FOR business.

Posted by Benny_Acosta | Report as abusive
 

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