No good deed goes unpunished
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. “