Friday, January 22, 2010

The unemployed: just a bunch of bums?

In a recent Time magazine article by Nina Easton, the pitch was made for cutting back on government entitlements to the unemployed.

I can agree with some of her points, as I, too, believe that welfare and unemployment can create dependency. But there were many points to Ms. Easton's article that I took issue with.

She starts off with this dubious axiom:
“Continually easing the pain of jobless Americans, it turns out, can contribute to high jobless rates by warping incentives to look for work.”

Oh sure, because it isn't a lack of jobs that is the problem right now, it's a lack of people willing to take them... This reminds me of the myth that Americans won't work in places like poultry factories (or apparently construction sites, either) if you pay them a decent wage, thus, we must give these jobs to illegal aliens.

Continuing on this line of thought, Ms. Easton posits an answer to the question, “why not do more for the jobless?”

“Because there's evidence that the extensions are only prolonging joblessness. Today's unemployment rate remains high not because of mass layoffs—most of which happened early last year—but mainly because more people are remaining unemployed for longer periods.”

Not only is Ms. Easton operating under a lot of assumptions about people just sitting around, turning down jobs, but she is also leaving a lot of realities out of this situation.

Yes, most of the mass lay-offs that we experienced occurred early last year. Here is what she leaves out, most of those jobs have not been replaced. Most folks have not been called back to work. Those lay-offs were permanent. And while perhaps not en masse — lay-offs, downsizing, plant closings, and liquidations have continued since.

Ms. Easton hints at the obvious:
“Ah, you say, that's because there are no jobs to be found. With an estimated six people applying for every job available, there's plenty merit to that argument.”

Yes, I know. Here is some food for thought.

She then continues on by citing a labor economist at Chicago's School of Business:
“Still, the unemployment rate rose from 8.6% in March 2009 to 10% now even as the job-vacancy rate held steady”.

Ah, an honest assessment of this would reveal two obvious explanations: One) lay-offs don't happen in a vacuum — when an industry experiences substantial lay-offs, other industries tied to it also must downsize and some businesses can't even sustain themselves any longer. This, too, can lead to more industries cutting back, creating a sort of domino-effect.

Two) due to population growth, the number of people looking to enter the workforce is constantly expanding. Just to keep unemployment steady more jobs must be created at a rate similar to population growth. It cannot remain stagnant.

In short, while the unemployed may have stayed roughly the same, and while job availability may have stayed roughly the same, the number of people needing a job has grown.

In fact, just to stay even, many economists say 127,000 new jobs must be created per month just to keep even with the population. Here are some state statistics on job growth and the lack thereof.

Ms. Easton goes on to cite studies which have found that people are most likely to find a job just as their unemployment benefits run out.

I'm sure there is a lot of merit to this, and it is certainly worth keeping in mind. Again, the most obvious explanation, outside of desperation helping to concentrate the mind, is that many folks will pass up menial jobs that pay less than what they used to make.

Ms. Easton makes mention of this fact:
“Many people use that thin cushion to wait until the last minute to act. They pass up lower-paying, less desirable jobs or they avoid moving to take a job.”

In some cases people should act sooner, no question about this. But Ms. Easton is conveniently overlooking some realities that many folks who actually in these situations find much more difficult to avoid.

Passing up lower-paying or less-desirable jobs is not necessarily wise or responsible behavior, however, taking a job that pays less than what one is receiving in unemployment is foolhardy at best.

I doubt Ms. Easton from her ivory tower would jump at the chance, but certainly for someone that less income means finally crossing that threshold where you lose the house, it simply isn't a viable option. And I can also appreciate the fear of a professional who is concerned that taking that job at McDonald's might become a rather permanent one.

But perhaps what was most indifferent to the reality of people's circumstances in Ms. Easton's commentary was the implied expectation that people can just up and move to a better job.

Some people can do this. Many folks can't. Moving costs money. And money is something that unemployed folks don't tend to have a lot of just laying around. Especially those who, unlike Ms. Easton, have spent a life of living paycheck to paycheck, rather than saving up several thousand dollars to move on a rainy day.

Also, selling a house which has already lost significant value and which you have invested most of your life in isn't a very viable option for some folks either.

Now I did agree with some of what Ms. Easton pointed out. I think providing nearly 2 years of unemployment is far too much. I would rather see perhaps a graduated program, in which certain benefits are weaned off over time, rather than just ending abruptly; a pat on the back and 'Good luck!'.

And she is correct that, “the longer people stay unemployed, the harder it is for them to find a job. It becomes a vicious circle that keeps at least some from moving back into the workforce and recovering lost financial security.”

I'm always amazed at the talk of folks who have looked for work for months or perhaps a year and then just simply give up. I know it has to be very difficult, but how does one just decide, 'ok, I'll just not work again.'

So, yes, the government needs to accept there are limitations to how long and to what degree the unemployed can be propped up, however, real people are experiencing real problems that cold ideology and utilitarian efficiency won't even begin to address.

In conclusion, much of Ms. Easton's article struck me as the same sort of insulting, elitist philosophy that fiscal conservatives often promote as if it were a wise old adage: poor people choose to be poor; rich people deserve their prosperity.

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