How you feel about whether Congress should extend unemployment benefits as part of the bill to preserve the Bush-era tax cuts may depend upon which side of the equation you’re on: Are you a jobless person whose benefits are about to expire, or are you a working person whose employer pays into your state’s unemployment insurance program?
Other questions complicate this debate: Do extended jobless benefits make it easier for able-bodied people not to look for work, or do they help stimulate the economy?
Both may be true, according to an analysis in Bloomberg Business.
Free-market conservatives point to a report by the Bureau of Labor Statistics that there were 3.4 million job openings at the end of October while millions of Americans were getting checks for being unemployed. Not so fast, the other side argues. “Although there may be a lot of jobs open at any given moment, most are quickly filled because there are so many job seekers,” the magazine reported in its Dec. 13-19 issue.
Policy analysts assume that unemployment checks enable some people to pass up available jobs. But how many? Federal Reserve economists in San Francisco studied whether the duration of unemployment was longer for people who were laid off or for those who voluntarily left their jobs. “They found only a small difference … [calculating] that the extension of benefits added about 0.4 percentage point to the jobless rate in late 2009,” Bloomberg Business reported.
At the same time, there is near-universal agreement that unemployment benefits boost the economy to some degree. A lifeline to the unemployed equals the ”most effective” way to stimulate higher demand, says the nonpartisan Congressional Budget Office. That’s because the jobless tend to spend their benefit checks right away, while wealthy people who get a large tax refund may not.