Why does Cynthia M. Allen hate the Unemployed?

To: Cynthia M. Allen, columnist for the Fort Worth Star-Telegram (mallen@star-telegram.com)
Re: Response to her article "Extending unemployment benefits exacerbates jobs problem"

You say extended unemployment benefits (which are less than 50% of someone's previous earnings) have "become a way of life for millions of Americans" — rather than saying "a lifeline for millions of Americans". It's as though you're implying that millions of people are voluntarily choosing to live in poverty, rather than working and bettering their lives for themselves and their families.

While it's true that five years into an economic recovery, there is no indication that the need will be diminished in three months time, but what you seem to be saying is, "They're already screwed anyway, so why don't we cut our losses now and thin the herd." That seems rather cold when referring to your fellow Americans, who just also happen to be human beings --- that is, it sounds cold to "anyone with a heart" (which you obviously lack).

Despite your claims, unemployment benefits don't "perpetuate the problem it claims to alleviate" --- it doesn't perpetuate, but it does help alleviate their problems—especially when it's time to pay the rent and buy food.

Where is the link that refers to the National Bureau of Economic Research that you say, concludes that the persistently high unemployment of the last five years can be blamed largely on unemployment benefit extensions. I can send you several links (including from the Fed) that says just the opposite is true.

And to say "businesses are forced to raise wages in order to incentivize workers to take vacant jobs" is totally ludicrous (to say the least). All the data shows just the opposite in our over-saturated labor market, and is having the affect of lower wages.

You say unemployment benefits "creates a vicious cycle of diminished labor demand that is exacerbated by the continued extension of long-term benefits". But how can that be when there are so many more people out of work than there are job openings?

And speaking or "morality" --- Where is the morality of putting people on the street because no one will hire them to work? When you say these benefits "should be temporary", who defines that period of time? Is it you?

The Great Recession has not been a "normal" downturn in a business cycle. In case you haven't been keeping up with current events, let's go back in history to 2008—when over the course of a year and a half 8.7 million jobs were lost. And new jobs created since that time have barely kept up with population growth.

And tell us how (as you claim) unemployment benefits can possibility undermine the efforts of businesses to create jobs and prevent millions of unemployed Americans from finding one (unless of course, employers were offering $5 or less an hour.)

If you really want to educate yourself, please take the time to read up on the subject first before pontificating (see the links below). "Better to remain silent and be thought a fool than to speak out and remove all doubt." ~ Abraham Lincoln

And finally, you have no right to preach to us about "the moral thing to do", because obviously, you lack any morals at all.

Debunk Junction:

It should be noted that the report she cites by the National Bureau of Economic Research was criticized by the Council of Economic Advisers to the President --- and researchers released a rebuttal debunking those false claims. Links to both reports are in this article.

And then there is this report from the San Francisco Federal Reserve that concludes:

Our analyses suggest that extended UI benefits account for about 0.4 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the past few years. It is not surprising that the disincentive effects of UI would loom small in the midst of the most severe labor market downturn since the Great Depression....Although economists have shown that extended availability of UI benefits will increase unemployment duration, the effect in the latest downturn appears quite small compared with other determinants of the unemployment rate.

As three researchers at VOX noted in the very last sentence of their article: "Recent studies conclude that the US benefit extension programmes of the Great Recession increased unemployment significantly, but by less than half a percentage point."

VOX also writes:

"Interestingly, recent studies conclude that the US benefit extension programs of the Great Recession increased unemployment significantly, but by less than half a percentage point (36-page study: Rothstein 2011, Farber and Valletta 2013). This evidence suggests that the unemployment insurance extensions in the US were less costly than previously thought."

The Fed study goes on to say, "The unprecedented extension of unemployment insurance (UI) benefits up to 99 weeks from 2009 through mid-2012 appears to have lengthened duration by a small to moderate amount (Rothstein 2011, Daly et al. 2012).

From Bill Moyers website: Study: Unemployment Benefits Don’t Discourage People from Finding Work:

A new study conducted by Jan Eichhorn, a sociologist at the University of Edinburgh, shows that even generous unemployment benefits have zero impact on people’s drive to go out and find a job...During a floor debate over extending benefits for the long-term unemployed, Senator Jon Kyl of Arizona put it directly: "Continuing to pay people unemployment compensation is a disincentive for them to seek new work." Not so, Jan Eichhorn reports.

"This means that claims about unemployment benefits resulting in complacent unemployed people who chose the situation, and would be satisfied with it, cannot be retained uncritically," Eichorn wrote.

The study is consistent with other previous research. A 2011 study by the Congress Joint Economic Committee found that among the long-term unemployed, those eligible for benefits spent significantly more time looking for jobs than those who didn’t qualify:

"In fact, since Congress enacted federal unemployment benefits, time spent looking for a job has tripled among the long-term unemployed who are out of work as a result of job loss."

As an aside:

According to research last year by the National Bureau of Economic Research (the group she cites), the chance of being called for a job interview falls by 45% as unemployment lengthens from one to eight months. And according to the most recent research by the Federal Reserve Bank of San Francisco, by the time he or she has been out of work for six months, the chance for reemployment drops to 10%.

As far as her other arguments:

The Congressional Budget Office estimates that a Democratic proposal to extend unemployment benefits for the long-term unemployed past 2013 would increase growth and add 200,000 jobs to the economy in 2014. But rather than creating jobs, cutting benefits could actually cost as many as 310,000 jobs, according the Economic Policy Institute.

My most recent articles on this subject below --- with links to all my claims...

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Sunday, January 19, 2014

Why does Cynthia M. Allen hate the Unemployed?

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