Get The Economy To Capacity. Then Cut Long-Term Unemployment Benefits.

Around 1.3 million Americans lost their long-term unemployment benefits on Saturday. Conservatives I've seen on TV and Twitter justify the cut by saying these individuals could get jobs, but are either lazy or too picky. These kinds of arguments were senseless when joke economist Casey Mulligan tried to run with them a few years ago and remain senseless even today.

There Are Not Enough Jobs

When North Carolina cut long-term unemployment benefits in July, Ben Howe laid out the argument the conservatives are still turning to today. The first part of that argument is that there are, in fact, plenty of jobs for these people to take. But how do you know? What evidence is there of this empirical claim?

As I drive around Charlotte, I see help wanted signs everywhere. Retail, restaurant, manual labor, and yes, government employment. All low paying, low-skill jobs. Most of which pay more [less?] than the $1,500 per month offered by the government that can allow people be picky in their hunt.

What a compelling method this is. To determine the number of job openings there are in the entire state of North Carolina, we just drive around one of its cities and look for help wanted signs in windows. That seems like a pretty solid way to do it, especially if, instead of counting the signs, you just kind of take an impressionistic account of their frequency.

Alternatively, you could just go around and ask employers how many job openings they have, keep track of what they say, and then add all those jobs up. I do not have a degree in statistics, but that's probably how I would do it. Lucky for us, the Bureau of Labor Statistics does exactly that.

Even using the official unemployment tally has us at around 3 unemployed persons per job opening. Including in discouraged workers (which makes sense in this context) would increase the number even higher.

If it was the case that unemployed people are just refusing to take jobs, then you would see a great deal more reported job openings. The number of unemployed people would be high and the number of job openings would be high as well. In that case, you might force the two to come together by trying to starve out the unemployed, as the conservatives support. But when jobs are scarce because of a weak economy, starving out the unemployed wont put them in jobs that simply do not exist. Some individuals might get jobs, but the aggregate plight of the unemployed will remain unchanged.

These Are Poor, Working Class People

The other piece of the conservative discussion on this is the claim that these are primarily people who had good jobs and just do not want to take the bad jobs that now exist. As explained above, this is in tension with the fact that there are not enough jobs period, bad or good. Our problems are not structural. The economy is just generally terrible.

But beyond that, it also mistakes who the long-term unemployed are. They are not disproportionately middle class and upper class people with high educations and such who just cannot bear to take a lower-status or lower-paid job. They are the opposite: "the long-term unemployed tend to be less educated and are more likely to be nonwhite, unmarried, disabled, impoverished, and to have worked previously in the construction industry and construction occupations." More than 54 percent have high school educations or less compared to just 38 percent of those employed. And 34 percent of them live in poverty, compared to 15 percent of Americans as a whole.

As with any group this large, there are some higher educated folks who may just be holding out, but that is certainly not the dominant or disproportionate character of long-term unemployed people as a group. The dominant and disproportionate character is exactly the opposite of that.

Conclusion

The obvious answer to the question of when to end long-term unemployment benefits is this: whenever we get back to full employment. Dumping people off of benefits does not magically create jobs for them to enter into. Perversely, it may actually reduce the number of jobs in the short term by withdrawing that spending. Cutting unemployment benefits in this macroeconomic climate is totally indefensible on the merits, but politics do not operate on the merits, and so here we are.

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