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Abandoning the long-term unemployed

2010.07.02_f4_Long-term-unemp.jpg

Michael Fletcher has an important piece this morning about Congress's likely abandonment of the so-called 99ers: The folks who've been unemployed more than 99 weeks, which is the limit for unemployment benefits. This is, in part, a function of the belief that unemployment benefits make unemployment stickier. Michael D. Tanner, a Cato scholar, put it simply: "Workers are less likely to look for work, or accept less-than-ideal jobs, as long as they are protected from the full consequences of being unemployed."

Here's something most people don't know about unemployment benefits: They're not flat across the country. The federal funding is tied to the unemployment rate. To get funds for 99 weeks of unemployment, a state's unemployment rate has to be higher than 8 percent. Nebraska, with its low unemployment rate, isn't eligible. Nevada, which is near 15 percent, is.

In a state with 9 percent unemployment -- which means more like 20 percent underemployment -- it's very difficult to believe that unemployment benefits are providing a serious disincentive to work. You worry about unemployment benefits when the labor market is tight enough that people can find jobs. You don't worry about them when there are tons of workers who need jobs, and very few jobs for them to get. Right now, there are about five workers for every one job. Unemployment insurance is not the problem here. That mismatch is. Endless unemployment insurance can be a problem when the labor market is ready to reabsorb the unemployed, but that's not the world we're in.

Unemployment is likely to remain above 9 percent for the rest of this year, and for much of next. That means the ranks of the long-term unemployed will swell even further. As you can see in the graph atop this post, that's been the trend so far in this recession, and it's not likely to stop now. And we're just going to leave them without incomes and without job opportunities and without money to spend in their wrecked local economies -- thus making it harder for those economies to generate new jobs? That's the economic theory this country is going to embrace amid terrible joblessness?

By Ezra Klein  |  July 13, 2010; 10:15 AM ET
Categories:  Economy  
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Comments

Seriously, what can be done to get the Dems in Congress off their collective backsides and get them to care about this?

They refuse to understand economic theory, which advocates unemployment benefits as the most effective stimulus because the money gets spent immediately, thus diffusing it through the economy. They refuse to understand the electoral argument, that voters care more about the current overall state of the economy and don't really care as much about the long-term deficit as polls and especially pundits would have us believe. They refuse to hear the humanitarian argument--that we who are well enough off shouldn't let our follow citizens starve (I give to food banks in the Bay Area and Detroit and am willing to see my taxes go up a bit). They persist in the belief that there are jobs everywhere that just go begging and don't seem to understand that demand has fallen so far with the bursting of the asset bubble and unemployment that we are in a downward spiral and businesses just aren't hiring because things are bad. They won't even listen to their own state governors who are pleading for help.

We rely on them getting some feedback when they go home to their districts, but my sense is that they just spend time with big donors and pals and don't really ever hear "the people." So they take their cues from Fox News or some such about what voters really think. And the media are so bad about informing both the voters and the pols that there seems no way out of this morass of ignorance.

It seems to me that democracy is really under seige here.

Posted by: Mimikatz | July 13, 2010 10:47 AM | Report abuse

Congress has failed
Every person that is unemployed or cares about the unemployed should be signing this.

http://www.change.org/petitions/view/the_99ers_need_ a_tier_v_added_ to_unemployment _benefits

I am not one of the unemployed however see the need for Unemployment extensions… The fact that Congress cannot find other cuts is unacceptable; they always go after what is needed the most and save their pet projects and Wall Street friends.

Congress needs to be held accountable for the their failure to create a jobs bill and a jobs market. Extending Unemployment is not the answer however it what is needed now.
The Answer is to create jobs, which will take Congress placing higher taxes on any company that out sources jobs over seas, higher taxes on any funds leaving the US and higher tariffs on imports. Until then we have to pay out unemployment for the failure of our leaders.

Support unemployment here, it is one of Change.org highest all time petitions.
http://www.change.org/petitions/view/the_99ers_need_ a_tier_v_added_ to_unemployment _benefits

I am dropping this link everywhere to gain support for the unemployed. I am doing my part, are you?

Posted by: Tim_incubator | July 13, 2010 10:52 AM | Report abuse

A lot of people in high unemployment states are also stuck with mortgages that are underwater and thus can't be modified with the administrations current voluntary mortgage modification program. One way to help the country start to rebalance between high unemployment areas and lower ones would be to pass bankruptcy mortgage modification, aka cramdown, so these loans can finally get resolved.

Posted by: jnc4p | July 13, 2010 10:59 AM | Report abuse

Riots.

The entire history of civilization is punctuated by riots when things go bad; one of the reasons the social welfare state is so useful is that it reduces the amount of riot-inducing hopelessness.

The U.S. is more spread out -- especially in states where senators hold the unemployed in contempt -- and our trance-inducing popular culture is the world's best. But that doesn't guarantee anything if the pressure is high enough.

Posted by: DeliciousPundit | July 13, 2010 11:01 AM | Report abuse

Not to be glib, but the argument suggests that bus tickets are the solution.

If jobs are available in one area, why aren't people flocking to that area? The generous welfare benefits (not necessarily unemployment insurance itself) available in some areas do seem to cause the jobless to overlook available work: the very thing that attracts invading Mexicans -- the availability of opportunities to labor -- seems to repel the many citizens on-the-dole. We bussed our children to overcome a perceived disparity, so bussing jobless adults couldn't be a bad idea.

Posted by: rmgregory | July 13, 2010 11:15 AM | Report abuse

99 weeks is already a very long time to collect unemployment. You have to have some kind of cutoff when benefits run out, you can't just keep paying them indefinitely. I understand how tough it is for many of these people, but say we extend it to 125 weeks, 150 weeks, that will be here before we know it and you could write this same post about the "150ers".

Posted by: ab_13 | July 13, 2010 11:30 AM | Report abuse

The argument that "people should just move to places with jobs" is really great because it's a pretty sure way of identifying people who are completely clueless and out of touch, and likely do not know anyone who is unemployed.

Sure, the thin sliver of the unemployed who happen to not have families, mortgages, and other location-based things to consider could do so, but what about the other 98% of the unemployed? There's a REASON places like Nowhere, Utah, and Abandonedville, South Dakota may have jobs -- because no one lives there and there is nothing out there. So you're asking a family of 4 to move to the middle of nowhere to take a fast-food part time job? That's your solution to the unemployment crisis? What idiocy.

Posted by: AntonX2 | July 13, 2010 11:56 AM | Report abuse

"That's your solution to the unemployment crisis?"

Have a better one?

It's true that it's hard for a lot of people to relocate, but if the jobs aren't coming back, relocations are a requirement for the situation to resolve.

In fact, the benefits make things additionally problematic for those who truly can't relocate, as they encourage those who are capable of moving to stay, wait it out, and compete for jobs with those who don't have a legitimate alternative.

Posted by: eggnogfool | July 13, 2010 1:05 PM | Report abuse

The tactics of discouragement? Perhaps some in Congress are banking on more of the the long term unemployed giving up looking for work (thereby losing any additional extended unemployment benefits) and fall out of the labor count (resulting in a lower official unemployment rate).

Posted by: tuber | July 13, 2010 1:11 PM | Report abuse

I am one of the 99r's. I have moved and am in my 3rd state. In the past 18 mths I have submitted 6,547 resumes for positions of fastfood, janitorial all the way up to the positions I am qualified for as a Legal Contract Administrator. In all that time I have had exactly 6 interviews. 4 told me I was over-qualified. 2 Stated that I was very qualified for the position but their friends kid........
I have done everything I am suppose to. I have lost everything I worked 38 years to build, including savings and retirement.
Without the extension I will be homeless..... To those who are employed, just wait it will be you next as States layoff between 300,000-600,000 workers and the other industries follow......THIS IS EVERY CITIZENS PROBLEM WAKE UP AMERICA this government is NOT FOR THE PEOPLE

Posted by: lyndalooking | July 13, 2010 2:46 PM | Report abuse

Th relocation argument is a straw man. Nebraska's unemployment rate is 5%, which is better than most places, but hardly indicative of surplus jobs going unfilled. If the millions of long term unemployed people were to come streaming in to Nebraska in search of work, very few would find work, and we would simply be relocating longterm unemployment from one place to another.

If there really were places in America where jobs were going unfilled due to a lack of qualified applicants, that problem would be well-publicized, and one can rest assured that many would relocate in order to find work. This is 2010, the age of monster.com, interstate employment agencies, and other tools, and these days if an employer needs to recruit outside the local area, they can easily do so.

-----------------------

"99 weeks is already a very long time to collect unemployment. You have to have some kind of cutoff when benefits run out, you can't just keep paying them indefinitely."

Of course, it is true that we can't extend the benefit forever. However, we traditionally extend the benefit during times of prolonged high unemployment, for several reasons.

We know that the odds of getting hired even for well-qualified people are significantly reduced, so the average job search will take longer to sucessfully complete. We know that if we cut off the benefits, many of the recipients will be left homeless and in poverty, and the "savings" from cutting off their benefits will eventually be exceeded by greater burdens on other government services to the poor. And as the Research Desk recently discussed, unemployment benefits are one of the most effective forms of economic stimulus, so they make a good investment in boosting demand in the private sector, which then will help to fuel job growth.

Posted by: Patrick_M | July 13, 2010 2:56 PM | Report abuse

* You have to have some kind of cutoff when benefits run out, *

You are correct. That cutoff is when unemployment falls below 7.5% or so.

Posted by: constans | July 13, 2010 4:37 PM | Report abuse

-----"You are correct. That cutoff is when unemployment falls below 7.5% or so."

Why 7.5%? Why not 7%? Why not 6.834526%? At that level there are still people who cannot find work that are going to get their benefits cutoff.

Posted by: ab_13 | July 13, 2010 4:51 PM | Report abuse

"Why 7.5%? Why not 7%? Why not 6.834526%? At that level there are still people who cannot find work that are going to get their benefits cutoff."

If a guy named Bush is in the White House, I hear even 6.3% unemployment is indicative of a Hoover-esque economy...

Posted by: justin84 | July 13, 2010 5:10 PM | Report abuse

ab_13, economists have ideas about what "natural unemployment" is-- what is referred to as the rate of people looking for work when the economy is otherwise doing well. This is around 3%-5%. Traditionally, we have extended unemployment benefits as long as the employment rate has been above 7ish% or so. I don't think people fully appreciate the fact that unemployment is a national crisis, and we should be providing relief to the unemployed while we simultaneously do everything we possibly can to lower the rate of unemployment and make sure more jobs are available.

Posted by: constans | July 13, 2010 5:18 PM | Report abuse

(1) Th relocation argument is a straw man. (2) Nebraska's unemployment rate is 5%, which is better than most places, but hardly indicative of surplus jobs going unfilled. (3) If the millions of long term unemployed people were to come streaming in to Nebraska in search of work, very few would find work, and we would simply be relocating longterm unemployment from one place to another.

(1) I think you should look up what a "straw man argument" is.

(2) What does "surplus jobs going unfilled" mean? What economic data would show whether that was the case? More people were hired than left jobs last month in Nebraska.

The point is someone would have a better chance of finding a job in Nebraska than in, say, Nevada. This will be true for the foreseeable future. That seems undeniable, yes?

(3) That's not really accurate. Population inherently comes with jobs; providing services to itself. New population (i.e., growing population) also creates the jobs that build the infrastructure necessary for the new population. This can actually be self-sustaining for a short period of time.

At some point, the underlying issue that any sub-economy has to have an exportable of some sort, but that's a broader (societal) issue where the narrow issue, that of a sub-population falling into poverty while losing skill relevance and employability, is allayed for a time.
Obviously the whole 'million people moving to Nebraska' concept is very unrealistic, but at least it's not a straw man.

Posted by: eggnogfool | July 13, 2010 5:19 PM | Report abuse

"(2) What does "surplus jobs going unfilled" mean? What economic data would show whether that was the case? More people were hired than left jobs last month in Nebraska."

And those jobs were successfully filled with Nebraska residents. If the unemployment rate were lower than what we consider staistically "normal," say at 2%, and employers in Nebraska were complaining that they did enough enough qualified applicants for their job openings, then Nebraska might be able to absorb some marginally significant number of unemployed persons from other states. But that's simply not the case today.

"The point is someone would have a better chance of finding a job in Nebraska than in, say, Nevada. This will be true for the foreseeable future. That seems undeniable, yes?"

It is "undeniable" that the average unemployed Nebraska resident today has a better propect of eventually finding work than an unemployed Nevada resident. It is equally undeniable that if you put all (or half, or any number at all) of the unemployed people in Nevada on a bus to Nebraska, Nebraska then becomes a much worse place to find work, and the Nevadans who made the trip are potentially no better off for the cost of their relocation.

There are already people today who hunt for work in other states and who are willing to relocate, and there are today employers who search across state lines for the right employees. It ALREADY happens...it is baloney to say that no unemployed job seekers are willing to relocate.

And so it is also baloney to suggest that there is work waiting in America for everyone, people are just not in the same places where the vacant jobs are, and that the solution is just for every employed person to buy a "bus ticket" to a state with a lower unemployment rate.

That is not any sort of "solution" to joblessness in America and it is ~indeed~ a straw man.

Posted by: Patrick_M | July 13, 2010 6:15 PM | Report abuse

ab_13, I think you have some fundamental confusion about the extension. You say:

"I understand how tough it is for many of these people, but say we extend it to 125 weeks, 150 weeks, that will be here before we know it and you could write this same post about the "150ers."

Nobody is proposing adding a tier that will extend benefits beyond the 99 weeks. Not Obama, not Reid, not Pelosi.

The maximum in normal times is 26 weeks, and the extension is aimed at giving people who became unemployed less than 99 weeks ago eligibility for the SAME maximum benefit if needed that the very first wave of unemployed were able to claim under the extension that was included in ARRA. Nobody is proposing more than 99 weeks, what is being proposed is that all of the unemployed as a result of the "great recession" will have the same safety net.

As as been often noted, Republican icon Ronald Reagan allowed the extensions for three years during a time with a similar rate of unemployment. Gosh, maybe he was another "socialist" - who knew?

Posted by: Patrick_M | July 13, 2010 7:00 PM | Report abuse

Perhaps Congress could reverse the legislation that caused this long-term unemployment - like laws supporting outsourced employees and materials. Since no one tells 99ers to keep certifying their unemployed status, Congress can claim the unemployment rate is falling. They are trying to ignore it as if it will go away - as if there are enough jobs to go around.

I'd love to see what would happen to the unemployment rate if everyone who has been cut off from compensation and is still looking for work reported their unemployed status with the state.

Thank you for your article Ezra.

Posted by: NewParadigm1 | July 13, 2010 10:24 PM | Report abuse

Great article Eara!

I am a 99er and can't tell you how much I (we)appreciate a journalist who acknowledges the 99ers even exist in the midst of all this unemployment debate that captures economic and political headline news stories across the country -

Thanks; your perspective is well stated -- and very much appreciated -- ...

Posted by: co_unemployment | July 13, 2010 11:14 PM | Report abuse

@Patrick_M: "ab_13, I think you have some fundamental confusion about the extension.

Nobody is proposing adding a tier that will extend benefits beyond the 99 weeks. Not Obama, not Reid, not Pelosi."
------

Maybe I am confused, but that's because Ezra started this post with a comment about "abandoning the 99ers," with the implication that we ought to help them. So Obama, Reid and Pelosi may not be proposing that, but it sure sounds like Ezra is.

-------
"As as been often noted, Republican icon Ronald Reagan allowed the extensions for three years during a time with a similar rate of unemployment. Gosh, maybe he was another "socialist" - who knew?"
-------

Have I called anyone a socialist or ever expressed any affinity for Ronald Reagan? Am I a republican? Burn those straw men somewhere else.

The only point I've tried to make is that there has to be a threshold, and no matter where it is you'll be able to find the unlucky few butting up against it and make a case for why we should help these people. So it is impossible for anyone to argue against this idea without being framed as not wanting to help the unemployed, when in fact anyone who thinks there should be a threshold, as you clearly appear to, is also in favor of "abandoning the unemployed". All it takes is someone who thinks the benefits should last for 99 weeks and 1 day, and in their eyes you yourself want to abandon the unemployed.

Posted by: ab_13 | July 14, 2010 11:08 AM | Report abuse

"Maybe I am confused, but that's because Ezra started this post with a comment about "abandoning the 99ers," with the implication that we ought to help them. So Obama, Reid and Pelosi may not be proposing that, but it sure sounds like Ezra is."

No, I think Ezra simply assumes that the readers already understand the extension legislation is intended to help the "99'ers" not the 100'ers or the 150'ers.

"Have I called anyone a socialist or ever expressed any affinity for Ronald Reagan? Am I a republican? Burn those straw men somewhere else."

I did not say you called anyone socialist. My observation is about the Republicans (+ Ben Nelson) who are opposed to extending the benefit and who claim that the deficit is the reason. Reagan extended the benefit and enlarged the deficit at the same time. Ronald ilson Reagan is supposed to be the Reublican patron saint. It is simply an observation about the irony of that historical fact.

"All it takes is someone who thinks the benefits should last for 99 weeks and 1 day, and in their eyes you yourself want to abandon the unemployed."

Uh ... if you say so, but (again) the purpose of the legislation being discussed here is simply to extend the SAME maximum period of benefits now that were granted under ARRA. As has always happened in the past, when the current massive unemployment shows some substantial decrease, there will be broad support not to grant further extensions. Until that time, maintaining the benefit is good policy, for the several reasons already discussed.

Posted by: Patrick_M | July 14, 2010 1:47 PM | Report abuse

Copy and paste your resume to the end of this petition. Let Washington know that we are not lazy, we’ve always worked, and we want to go back to working!http://www.change.org/petitions/view/americans_for_a_working_america

Posted by: maderi | July 14, 2010 2:33 PM | Report abuse

My apologies for entering the fray late (in comments only; I have phoned, faxed, and posted elsewhere @ UI, extensions, etc.) and I offer all my fellow LTU's (99ers) and all unemployed Americans my prayers and empathies for you and yours.

Sadly, by today, no matter this apparent "epiphany" NP and her squabbling charges might be having @ LTU's (and all), I cannot believe the Senate will pass a GOOD, EQUITABLE bill. I just can't. Had, say, CBS fired up a 60 Minutes piece on unemployment or NBC done a documentary on us months ago I could have hope. MSNBC is so left and FOCKS is so far right, their rhetoric isn't worth much. We needed some hammers and tongs, not paint balls and sparklers.
I wish you all - no matter what Tier you're due or pray for - the best of prayers and health. This is so difficult, every day so dramatic, we all have to remember - one way or another - to have a faith and know one day better things will come.

Posted by: kickoradell | July 14, 2010 6:10 PM | Report abuse

@Patrick_M: "No, I think Ezra simply assumes that the readers already understand the extension legislation is intended to help the "99'ers" not the 100'ers or the 150'ers."
------

First you said "Nobody is proposing adding a tier that will extend benefits beyond the 99 weeks," but now you're saying the legislation is meant to help the 99ers. That is completely contradictory. How could the legislation help 99ers if it is not going to extend benefits beyond 99 weeks? Am I missing something here?

-------
"Uh ... if you say so, but (again) the purpose of the legislation being discussed here is simply to extend the SAME maximum period of benefits now that were granted under ARRA."
-------

Ezra's very fist sentence says:
"Michael Fletcher has an important piece this morning about Congress's likely abandonment of the so-called 99ers: The folks who've been unemployed more than 99 weeks"

Maybe the bill is about extending the ARRA benefits to people who have not yet been unemployed for 99 weeks, but Ezra very explicitly said this is about "abandoning the 99ers". Maybe Ezra was wrong or misspoke. If that's the case the problem is with his post, not my response that addressed exactly what he said. There is nothing in Ezra's post that even remotely implies he is talking about people who haven't hit the 99 week limit, in fact the opposite is true, he clearly says he's talking about those people. There is no ambiguity there, I'm not sure why you insist on saying I'm misunderstanding something.

If the legislation being proposed is only to extend the same 99 week benefits to more people, then this idea of "abandoning the 99ers" is completely irrelevant, but that would a problem with Ezra's post, not my rebuttal.

-------
"I did not say you called anyone socialist. My observation is about the Republicans (+ Ben Nelson) who are opposed to extending the benefit and who claim that the deficit is the reason."
-------

OK, it just seemed odd that you went from addressing me to talking about Reagan and socialists. Maybe you were completely shifting gears and I misread your intent.

Posted by: ab_13 | July 14, 2010 6:13 PM | Report abuse

Thanks Ezra for a great article and sharing these insights which are overlooked. Some people don't understand the intent of your article but for those of us who are unemployed from 26 weeks thru 99 weeks your insights hit home as to the mess this economy is in. Yes we are abandoning the 99er's if the Senate passes the bill before them next Tuesday to extend benefits and if the Senate does not pass this bill it affects all of the unemployed who have exhausted their benefits whether it is 26 weeks or any tier therafter. But if passed, the 99er's will be the ones out of benefits. Ezra is saying that if we ignore them now that the presently unemployed who have not reached this point may swell in numbers soon since the job market is not expected to recover in the next few years. This bill would not have automatic triggers so come November the unemployed will be in the same situation no matter what tier you have reached. The comment about Reagan rang true because although I am Democrat he was a leader in passing statutes to protect the environment and providing unemployment to those who needed it. His present day Republican compatriots could take lessons from him and pass this legislation without filibustering. This issue has divided our country and we have abandoned the 99er's if this extension passes. Thank you for pointing this out and what that says about our country.

Posted by: anonymous79 | July 15, 2010 6:39 PM | Report abuse

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