Unemployment


Consider 20,000 unemployed people.

Which population would obtain a job quicker?

  1. This group obtains $300.00 per week up until they find a job.  Or hit 26 weeks.  Which ever comes first.
  2. This group gets 26*$300 the day after they file for unemployment benefits.

Knowing this would you change the way in which you construct the unemployment programs?

Advertisements
11 comments
  1. If the unemployed folks could decide which package to accept, than those who choose the second package would find jobs quicker.

    Why, because they are more intelligent. They know that the Net Present Value of the second proposal is higher than the first.

    A government, from a financial standpoint should pay out the first because it has a higher NPV for government (i.e., it is less negative) and some percentage of the unemployed will find jobs before you have to pay them the full amount.

    • pino said:

      those who choose the second package would find jobs quicker.

      I agree.

      However, we’re not letting the folks decide.

      Why, because they are more intelligent. They know that the Net Present Value of the second proposal is higher than the first.

      Well, by how much?

      I suspect it’s because they know that they can maximize their income better this way.

      The incentive in the first plan is to continue the $300 payments for as long as possible. This may mean a reluctance to look for a job, a reluctance to accept a job that pays near $300 AND an incentive to accept work under the table.

      Actuaries should be able to determine the “correct” amount of money to pay an individual up front in order to sustain them AND incent them to look for and accept a job.

  2. nickgb said:

    Have you ever lived on $300/week in a major city? Especially if you have debt or other obligations? I get it, you think that because there are some jobs, that means that all unemployed people are lazy, but how do you explain the huge number of unemployed people who have exhausted their benefits? Are they all happier making nothing at all than working?

    Surely you can find better targets than the unemployed to focus so much attention on. Maybe puppies? Or unwed mothers who abuse their child support?

  3. pino said:

    Have you ever lived on $300/week in a major city?

    Nope. And that’s kinda my point. I don’t many people are either. I think they have some other form of income supplementing that benefit.

    I get it, you think that because there are some jobs, that means that all unemployed people are lazy

    There is certainly a degree of that. However, I’m more critical of the policy that creates incentives to not work.

    Are they all happier making nothing at all than working?

    Is there a limit to which even the most Liberal Democrat would call “Uncle”? Where even Bernie Sanders would cry; “Enough! We can not continue paying these people money not to work.”

    I suspect that the Left has no such brake. That there is no thought given to such metrics.

    Surely you can find better targets than the unemployed to focus so much attention on.

    I’m not focusing on the unemployed. I’m focusing on the people who create poor incentives. I don’t think that offering 99 weeks of unemployment drives correct behavior.

    But take it further….why stop at 99 weeks? WHy not go so far as Europe? There are nations that have experimented with 4-5 years of unemployment benefits. Surly that is better, yes?

    Maybe puppies?

    Nah, San Francisco hasn’t hit Raleigh yet 😉

    Or unwed mothers who abuse their child support?

    While I think she is a horrible mother and quite possibly a horrible person, I don’t think that Ms. Anthony is guilty of First Degree murder.

    • nickgb said:

      Well, you know you can blame that san fran stuff on Sean, he’s clearly the moving force…

      If we’re paying people just enough to survive, that’s not enough to keep them from really working. You’re assuming that these people have other sources of income, but why? Where do you get that? Do you actually have evidence of that?

      • pino said:

        Well, you know you can blame that san fran stuff on Sean, he’s clearly the moving force…

        I’ve tried to get him to move out of California, but he insists…..

        You’re assuming that these people have other sources of income, but why? Where do you get that? Do you actually have evidence of that?

        No, but Ill look. I have the same reaction to the benefits that yo have; you can’t live on 3 hundo a week. Add that to the fact that when benefits are set to expire, people “find work”.

  4. dedc79 said:

    One interesting observation is that we are seeing an expansion of the private job market but because the federal government spending/stimulus has been cut off and state’s are in fiscal trouble, public sector/govt jobs are vanishing. The same republicans who said jobs!jobs!jobs! don’t mind that fiscal austerity is actually costing many americans their jobs.

    • dedc79 said:

      meant to link to this, sorry: http://thinkprogress.org/yglesias/2011/07/08/263588/the-conservative-recovery-continues-2/

    • pino said:

      One interesting observation is that we are seeing an expansion of the private job market

      Did you see the jobs report this morning?

      because the federal government spending/stimulus has been cut off and state’s are in fiscal trouble, public sector/govt jobs are vanishing. The same republicans who said jobs!jobs!jobs! don’t mind that fiscal austerity is actually costing many americans their jobs.

      We knew that even as the Feds were giving money to the states to hire teachers and census workers, those jobs were gonna disappear. The fact that we spent a ka’trillion dollars to create some jobs that everyone knew were going to vinish is hardly reason to argue to spend a ka’trillion more.

  5. If I was out of a job and had 26 weeks to find one, I’d be looking from day one. 26 weeks isn’t that long.

  6. pino said:

    If I was out of a job and had 26 weeks to find one, I’d be looking from day one. 26 weeks isn’t that long.

    Hi Bruce,

    I understand that many many unemployed folks are working hard to get back to work. Some are stuck due to geographical limitations, others are limited for other reasons. My main point is that policy comes with incentives. And our policies should be the ones that create those incentives we like best.

    Consider:

    This is the unemployment picture in Denmark. The red line indicates % employed over time when benefits lasted FIVE years. In the immediate weeks following job loss, the rate was high. Then leveled off dramatically until……until they began to bump into the 60 month limit.

    Guess what happened when they changed form a FIVE year plan to a FOUR year benefit plan. Low levels of rate of return until…you guessed, benefits were close to expiring. The green line.

    Now check out Pittsburgh:

    In the weeks IMMEDIATELY preceding the termination of benefits, people all of a sudden “found work”. I’m not sure if these folks are not looking, get frustrated or happen to be working under the table…I don’t know.

    What I do know is that people find work right as benefits expire.

    So I’m willing to compromise. Rather than drag out the inevitable for 26 weeks, 99 weeks, 4 years or even 5 years, give the unemployed a lump sum right up front and wish ’em luck!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: