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No, Taking Away Unemployment Benefits Doesn’t Make People Get Jobs

JP Hochbaum

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What creates jobs, is having more spenders. That is the only way capitalism can sustain itself. Spending is reduced when UE bennies are slashed, when there is excess in savings (increases in inequality), and when non demand-pull inflation rises.

"In January, one month after they lost benefits, 64,000 of them, or 86 percent, were still unemployed, according to an analysis of wage records by the Illinois Department of Employment Security (IDES). February was similar: 61,3000 people were still unemployed, or 82.7 percent of the original group. That means two months later, four out of five people who were cut off from benefits still weren’t bringing in wages.
“This notion that temporary unemployment benefits provide people a reason not to return to work really needs to end because it is not supported by the data,” IDES Director Jay Rowell said.
Other natural experiments have shown that, rather than spurring a flurry of hiring, cutting off benefits can have disastrous consequences. North Carolina was ahead of the pack, making such drastic cuts to its benefits system that it was dropped entirely from the federal long-term compensation program. The number of state residents receiving benefits dropped by 40 percent to 45,000 by December. Since then, the unemployment rate has dropped, but not likely because people are finding work but because they’re giving up altogether. More than 22,000 found a job after the loss of benefits, but the state’s labor force is experiencing the largest contraction in history, with 77,0000 fewer people working or looking for a job in October compared to the previous year.

No, Taking Away Unemployment Benefits Doesn't Make People Get Jobs | ThinkProgress
 

Arbo

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No, Taking Away Unemployment Benefits Doesn’t Make People Get Jobs

Nor does giving them 'assistance' for years on end.

Are you saying that because some learn to save and others do not, that is inequality? That peoples personal actions cause economic inequality?
 

JP Hochbaum

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Nor does giving them 'assistance' for years on end.

Are you saying that because some learn to save and others do not, that is inequality? That peoples personal actions cause economic inequality?

A lack of income creates income inequality.
 

ttwtt78640

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Nor does giving them 'assistance' for years on end.

Are you saying that because some learn to save and others do not, that is inequality? That peoples personal actions cause economic inequality?

It makes more sense to give someone assistance based on what they used to make working than based on how many dependents they can create. ;)
 

Arbo

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A lack of income creates income inequality.

But what you said was "when there is excess in savings (increases in inequality)".

So are you saying that those that learned to and do save, create 'inequality'? If so, how do you propose to rectify that inequality?
 

JP Hochbaum

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But what you said was "when there is excess in savings (increases in inequality)".

So are you saying that those that learned to and do save, create 'inequality'? If so, how do you propose to rectify that inequality?

Yes, savings removes "demand" from an economy. Well there are many options to rectify it. You can add income to the bottom, replacing the lost demand. OR you can redistribute the savings that have drained demand.
 

mike2810

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A lack of income creates income inequality.

and???

If you have more income than me, can I have some of yours? We all have to be equal right?:mrgreen:

I now people who were able to live on the unemployment they received and did not look for work until their benefits ran out. I also know people who have been looking for work since day 1 they were laid off. Some found work, some took time to find a job.

Bottom line. The long term unemployment that Congress has passed in the recent past comes at a cost to tax payers because the tax payer will have to eventually repaid what Congress borrows in its spending.
 

ttwtt78640

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Yes, savings removes "demand" from an economy. Well there are many options to rectify it. You can add income to the bottom, replacing the lost demand. OR you can redistribute the savings that have drained demand.

Savings are a darned good idea for when times get tough. Perhaps the grasshopper and ant fable explains that best. Of course, if you can rely on gov't to get you through hard times then you can be a happy, carefree and comfortable grasshopper. ;)

Aesop's Fables
 

Arbo

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Yes, savings removes "demand" from an economy. Well there are many options to rectify it. You can add income to the bottom, replacing the lost demand. OR you can redistribute the savings that have drained demand.

Savings removes what 'demand'?

So you think the more some people save, the higher the wages at the bottom should be? You realize that is an endless cycle right? You raise the bottom, labor rates go up, which means prices go up, which means those at the bottom do not end up any better off, where those in the middle and top that also have an increase in income (due to the bottom being raised) end up better off because they know how to save. They save more, and that grows your 'inequality'.

And do you really think government (or anyone) has the business or authority to STEAL the savings of others to redistribute it among those that have not saved?

I find it funny that anyone would think that I, because I save, is 'part of the problem of economic inequality'. No, I am part of the solution, because when horrible things happen, I have always had the savings to get through, and did not need to feed from the government tit.
 

JohnfrmClevelan

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If you have more income than me, can I have some of yours? We all have to be equal right?:mrgreen:

If you spend almost all of your income, it doesn't matter how much you make. You aren't part of the problem.

I'm sure you have heard of the theoretical steady-state economy, where 10 people produce $10,000 worth of stuff and buy $10,000 worth of stuff every year, right? All production gets purchased, so everyone keeps on making the same amount of stuff for sale. Then, when one of them decides to save, the whole cycle goes downhill, because there is unsold production, so everybody contracts and produces a little bit less. That's pretty much what would happen if the government did not replace lost demand with deficit spending.

Bottom line. The long term unemployment that Congress has passed in the recent past comes at a cost to tax payers because the tax payer will have to eventually repaid what Congress borrows in its spending.

Not true, actually. Sovereign debt is different than a loan that you or I would take out. Governments that create their own fiat currency do not need to borrow that currency from anybody.
 

JP Hochbaum

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Savings removes what 'demand'?
Aggregate Demand, you should know this.

So you think the more some people save, the higher the wages at the bottom should be?
No I think that people should receive a basic minimum income or a job guarantee that pays them enough to earn a living.
 

Arbo

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Aggregate Demand, you should know this.

Ah, Keynes. That explains a lot.

No I think that people should receive a basic minimum income or a job guarantee that pays them enough to earn a living.

Who determine what that amount is? How many 'busy work' jobs are needed to fulfill this dream? Are there any requirements for them to, i dunno, save money and not blow it on booze and whatever the latest electronics are and not burry themselves in debt?
 

DA60

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I don't care if taking their benefits away makes them get jobs or not.

All it is for me is a form of government welfare - I say do away with it entirely.

And if people lose their jobs and don't have any savings - tough...serves them right for not saving for a rainy day (I realize 'saving' is a four letter word for Keynesian's).

And if they lose their house and have no food - the government should house/feed you in an emergency shelter.

Not good enough - again, tough.
 

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What creates jobs, is having more spenders. That is the only way capitalism can sustain itself.
Not necessarily. High spending leads to high credit and over-speculation which then creates market bubbles which tend to burst and plunges markets into inevitable recessions. High savings combined with low spending creates slow but sustained growth- just because people dont spend as much doesnt mean that a market ceases to exist, there will always be a market, albeit smaller, but at the same time, less riskier. I dont see a relation between unemployment and spending unless its a full service economy.
 

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Long term unemployment has been a huge issue. While i think short term unemployment is a good thing it is not something that people can live on forever.
unemployment depends on the state where i live the max unemployment is about 275 a week. that is not enough money to pay rent let alone any other bills.

It gets even worse the longer you are on unemployment the worse your chances of getting a job are.
being unemployment for 3 months lowers your chance by 50%. at 6 months you are slim to none of getting a job.

employers view you as unhirable as you should have been able to get a job doing something.

while unemployment should be there for an emergancy it isn't something that should constantly be given out as it hurts people more than helps them.
here is a great article on it.

More discouraging news for discouraged workers: New study
 

ttwtt78640

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Seriously, you are conflating UI with SNAP?

Not exactly. More UI/MW to the "safety net" concept in general. The problem as I see it, is that some wish entry level wages to no longer be based on the work actually done, but to offer a "decent wage" - one that can support 3 dependents in addition to the worker.

The UI rate is always set at some lesser percentage of the person's prior earnings (even if they were working for MW); it is not based on household size or other income within that household. It also seems that, regardless of local job opportunity, one is expected to stop needing that assistance (in 13 weeks?) and take any job that pays the UI amount or more. UI is not paid at different rates (or for longer times) based on household (or prior worker) need,

The "safety net" assistance is offered for indefinite amounts of time and is based on household size and other household income. In other words, there is little (if any) pressure for the recipient to get (or keep) a job or not to add a dependent (to get a raise) with "safety net" assistance.
 

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Not necessarily. High spending leads to high credit and over-speculation which then creates market bubbles which tend to burst and plunges markets into inevitable recessions. High savings combined with low spending creates slow but sustained growth- just because people dont spend as much doesnt mean that a market ceases to exist, there will always be a market, albeit smaller, but at the same time, less riskier. I dont see a relation between unemployment and spending unless its a full service economy.

Scenario: balanced federal budget. No trade deficit. Zero population growth.

Year 1 GDP is $1 trillion, so income is $1 trillion. Savings rate is 10%.

Year 2: GDP is $900 billion, so income is $900 billion. Savings rate is 10%.

Year 3: GDP is $810 billion, so income is $810 billion. Savings rate is 10%.

Year 4: etc., etc.
 

Arbo

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Scenario: balanced federal budget. No trade deficit. Zero population growth.

Year 1 GDP is $1 trillion, so income is $1 trillion. Savings rate is 10%.

Year 2: GDP is $900 billion, so income is $900 billion. Savings rate is 10%.

Year 3: GDP is $810 billion, so income is $810 billion. Savings rate is 10%.

Year 4: etc., etc.

I'm sorry, but that is so stupid and simple minded it's simply amazing. It goes back to the whole belief that there is only so much 'pie' to go around. Yes, it is understood that you believe in a biased bit of economics that thinks saving is bad, because then people would be able to take care of themselves and government would not have to. That bias want's people dependent on government. All crap.

Which reminds me, I need to return to this:

JP said:
Aggregate Demand, you should know this.

Demand is infinite. People always want things. It's production that grows an economy, not demand. Borrowing and borrowing to purchase items outside the economy (from another country) does not grow our economy, it only inflates a deficit bubble that will eventually implode.
 

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Scenario: balanced federal budget. No trade deficit. Zero population growth.

Year 1 GDP is $1 trillion, so income is $1 trillion. Savings rate is 10%.

Year 2: GDP is $900 billion, so income is $900 billion. Savings rate is 10%.

Year 3: GDP is $810 billion, so income is $810 billion. Savings rate is 10%.

Year 4: etc., etc.
Silliest response in the history of DP. Congrats.
 

Muhammed

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I don't care if taking their benefits away makes them get jobs or not.

All it is for me is a form of government welfare - I say do away with it entirely.
It's not welfare, it is insurance that they were forced to pay for.
 

JP Hochbaum

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Ah, Keynes. That explains a lot.
And every economist since then.



Who determine what that amount is? How many 'busy work' jobs are needed to fulfill this dream? Are there any requirements for them to, i dunno, save money and not blow it on booze and whatever the latest electronics are and not burry themselves in debt?
Why would you want so much government control?
 

JP Hochbaum

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Not necessarily. High spending leads to high credit and over-speculation which then creates market bubbles which tend to burst and plunges markets into inevitable recessions. High savings combined with low spending creates slow but sustained growth- just because people dont spend as much doesnt mean that a market ceases to exist, there will always be a market, albeit smaller, but at the same time, less riskier. I dont see a relation between unemployment and spending unless its a full service economy.
I never said increased spending via credit, I said increased spending via increased income. Big difference. People need to stop putting words in my mouth.
 
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