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Every year the Associated Press interviews top economists and asks them for their thoughts on the coming year.  This year we have good news:

The three dozen private, corporate and academic economists expect the economy to grow 2.4 percent next year. In 2011, it likely grew less than 2 percent.

The year is ending on an upswing. The economy has generated at least 100,000 new jobs for five months in a row — the longest such streak since 2006.

The number of people applying for unemployment benefits has dropped to the lowest level since April 2008. The trend suggests that layoffs have all but stopped and hiring could pick up.

While a 2.4% growth rate isn’t as large as we would like to see, it does represent a better than 20% increase over last year’s numbers.  As long as we continue to grow, every little bit helps.  However, the employment picture doesn’t seem to look ay brighter for next year that for this year:

Unemployment will barely fall from the current 8.6 percent rate, though, by the time President Barack Obama runs for re-election in November, the economists say.

Not only has this economic crisis been deep but it’s been wide.  We’re gonna be looking at elevated unemployment for years to come.

Last summer I posted that I expected unemployment numbers to improve in various states:

See, for a long time I’ve argued that one of the reasons we see extended unemployment is that we offer benefits for so long.  We create the incentive to remain unemployed.  Now, it may be true that the benefits are enough to keep the individual in home and food, but barely.  However, it’s also true that the benefits encourage “under the table” wages.  Either way, the incentive to work is gone.  And when that incentive to NOT work is replaced with the incentive TO work, well, people will, in general, work.

So, to that end, I hereby predict that the following 6, actually 4 –25 is not very different from 26– states will see their employment/unemployment numbers improve:

Michigan, Missouri, and South Carolina cut their available weeks down to 20; Arkansas and Illinois cut down to 25; and Florida cut to between 12 and 23 weeks, depending on the state’s unemployment rate.

As of this month, this is where each stands:

That was then.  And the numbers I had in August were through June.  So, how have July, August, September and October done to prove me right?  Or wrong?

I was mostly wrong.  The rates mostly stayed the same or increased  Only in 2 cases is the rate better now than the June numbers.

However, as I am writing this I looked into the chance that the federal government provides benefits:

Here’s how the system works: The jobless collect up to 26 weeks of state benefits before shifting to the extended federal program. Federal benefits consist of up to 53 weeks of emergency compensation, which is divided into four tiers, and up to another 20 weeks of extended benefits. The maximum is 99 weeks.

Small consolation, but that is why my prediction was wrong.  The feds just pick up the slack.

Sigh.

 

I often remark on the powerful effect of incentives.  Lately it’s been with creating an incentive to cross a busy freeway.  My point being that the government can cause perverse incentives.

In the past I’ve mentioned that unemployment benefits create the same condition.  By the nature of paying someone not to work, you create an incentive NOT to work.  At lest on some level.  Further, if the benefit is large enough, the individual is going to create an internal value proposition and will only return to work when that value proposition reaches an inflection point that benefits him.  In other words, no one is going to work for 40 hours for $320 when he can not work for 40 hours and make $335.

For evidence, I wanna share this editorialHat Tip Dan Mitchell

Last year the demand for our construction services, to our delight, was as they say “going through the roof” to a point where were turning down more work than we were accepting. Frustrated that we could not be available to the potential new clients that were calling on us, and simultaneously excited that this was happening to our company, since unemployment had broken the double digits marker. I decided we would grow, work to sign up as much as 40% more in total contracts, and hire up to 12 additional full time employees. Basically take advantage of our good fortune and get a small portion of our community back to work.

The plan was initiated, the additional contracts were signed up and then we set out to hire the employees. Little did I know that attempting to hire the employees needed, which I had thought to be the easiest part, would turn out to be a nightmare if not impossible. I’m sure that reading this you will be almost as surprised as I was directly experiencing it.

My experience: Before 2009 if our company advertised for an open position, on average we would get 20 to 30 applications, interview six to eight of the applicants, and hire one or two, based on the quality and potential of the candidates. This process has been deteriorating dramatically since 2009 and now at the end of 2011 it has completely hit bottom. Of all the applications that we have received this year, when asked why they were seeking a job with us, one out of three answered: my unemployment is running out and I have to go back to work. Earlier this year after I hired two new full-time employees, went through our company’s orientation process, fitted them with our work clothing and booked them to start within a week, they both quit. One called ahead of the start date to apologize but wanted to inform us he would not be coming in because the government had just extended unemployment benefits again. The second one just did not show on his first day and when I called him he said he couldn’t come in now because unemployment had been extended and he was making almost as much as we were planning to start him out with. If this is not frustrating enough to those of us that provide jobs and pay taxes let me give you my last two attempts this year. Both times we advertised in various media at great expense. The first time only seven applicants came in, I set up personal interviews with two for potential hiring, neither of them even showed up. The second time with six applicants, I set up interviews with four, one called in to cancel the interview, one did not even show up, two actually came in, though one was late. To summarize (in case you missed the math) of the last six people that I called for interviews for potential full-time employment only two came with one being late. It is more than frustrating, it’s perverted.

If we are going to insist on providing unemployment benefits, at least reform the process so that the individual has to report to an office, perform community service when waiting for responses and allow for better monitoring.

I have long argued that if we are going to pay people not to work, we should be allowed to dictate what we want for that pay.  For example, when I go to work, my boss is able to guide my activities.  He gets to prioritize my day and my efforts.  He gets to do this because we have entered into some agreement where I end up getting paid.

I see little difference when we provide Unemployment Benefits to folks who aren’t working.

In theory, the benefits are meant to provide some relief to the out of work individual during their time looking for gainful employment.  Even while I disagree with the program, I can understand what we’re all trying to do.  I really do.

However, if we are going to be spending all this money to help people out, I think that we should be able to watch over the program.  For example, if we want people to find a job, we should ask that they come to a “job finding office”.  That is a place where computers would be available, resume consultants and even job placement professionals.  To be sure, if someone has an interview, they would be free to attend and “time off” would be accommodated.

Further, if there is time in the day when filling out applications and constructing resume’s has ended, there must, MUST, be good work the folks could engage in in an effort to “earn” the benefit pay.  That good work could even be charity or community service; reading to kids or the elderly.  Anything.

Well, it seems as if lawmakers are reading Tarheel Red:

A Georgia lawmaker wants the unemployed to put in community service hours in exchange for their government-paid jobless benefits.

John Albers, a Republican state senator, has proposed a bill that would require out-of-work Georgians to volunteer at charities at least 24 hours every week, according to MyFoxAtlanta.com. Otherwise, they wouldn’t receive unemployment benefits.

“We want to have a society that is responsible and that is accountable,” he said.

The lawmaker, who calls his bill the Dignity for the Unemployed Act, brushed off concerns that the volunteerism would cut into valuable job-searching time. And he said the law would provide “flexibility” so that if somebody needs to go to extra interviews one week, he or she could make up the volunteerism hours the following week.

Now, to be sure, I have some issues with the good congressman.  I don’t think that we need the government to dictate charity, this sounds like Obama.  And second, I would flat out give the candidate excused time for ANY work related activities.  Got an interview?  Go, good luck and win that job!

Certainly there is room for compromise here, yes?

I know.

I KNOW that a professional used to making North of 80k isn’t interested in hearing this.  Hell, someone making 30k doesn’t wanna hear this either.  But the fact is, there are jobs out there.  The problem is, the government is making it impossible to fill ’em.

When a potential worker is faced with working 40 hours a week in order earn 8-9 bucks an hour [$320-$360 a week] vs. not working at all and making $310 in unemployment, it doesn’t take a rocket surgeon to figure out what’s gonna happen.

By the way, McDonalds is offering 401k, insurance, cheap food and scholarships.

There are jobs.  That doesn’t seem to be the problem.  We need people willing to work.

One of the most powerful lessons I’ve taken away from all the reading, studying, arguing and debating I’ve done over the past 4 years of my “political awareness” has been that of incentives.  And how much they matter.  And until you can admit that people are driven by incentives, in general mind you, you will never be able to understand how laws and regulations shape our world.

Consider:

(AP) ONEONTA, Ala. – Potato farmer Keith Smith saw most of his immigrant workers leave after Alabama’s tough immigration law took effect, so he hired Americans. It hasn’t worked out: Most show up late, work slower than seasoned farm hands and are ready to call it a day after lunch or by midafternoon. Some quit after a single day.

Now listen, Alabama has an unemployment rate of 9.8%.

Nearly 1 in 10 Alabamians are out of work.  More I’m sure, if you count the folks who’ve given up.  And the numbers are worse if you add up those folks who are underemployed.  Yet farmers can’t keep help.

Too be sure, the value proposition is a tough one:

 It’s hot, the hours are long, the pay isn’t enough and it’s just plain hard.

At his farm, field workers get $2 for every 25-pound box of tomatoes they fill.

A crew of 25 Americans recently picked 200 boxes — giving them each $24 for the day.

That’s $3 an hour.  Hardly worth downsides of the job.

Finally, and here is the kicker, the government makes it too easy to say “no” to jobs:

It may make sense for some to sit on the couch. Unemployment benefits provide up to $265 a week while a minimum wage job, at $7.25 an hour for 40 hours, brings in $290.

Who in their right mind would choose to work back-breaking jobs in order to make an effective $25 a week?

No one.

There are jobs out there all right, just that we make it too easy to say no to ’em.

Remember, that of which I speak also feels that a reason we have so many unemployed folks is because of the iPad relieved so many type-setters from their jobs.

Just know about who we’re talking about here.

Anyway, it seems that the Good Reverend’s Son feels the government should just hire the unemployed:

Illinois Democratic Rep. Jesse Jackson, Jr. told The Daily Caller on Wednesday that congressional opposition to the American Jobs Act is akin to the Confederate “states in rebellion.”

Jackson called for full government employment of the 15 million unemployed…

I suspect he wants them to assume a occupation in type-setting perhaps?

Anyway, so yeah.  Jesse wants the government to just hire the 15 million people.  And then what?

I believe … in the direct hiring of 15 million unemployed Americans at $40,000 a head…

Remember, I told you this guys isn’t smart.  iPads contributing to the unemployment rate.

So yes, Jesse wants to hire 15 million people at $40k a pop.  Guess what THAT does to the unemployment rate?  It SKY-rockets.  Everyone under $40,000, or even those at some marginal value higher than $40,000, will become unemployed over-night.

Every blessed one of ’em.

Now, what I would do instead of listening to the not-smart Rep from Illinois, is declare everyone on unemployment to be an employee.  And make ’em work.

There, problem solved.  Except my idea is better.

40,000 a head, really…….

I’ve found myself in need of qualified employees working in my organization multiple times in my life.  I’ve been in need of book keepers, bartenders and technical professionals.  In each case, my primary goal was to find the very best individual for the job.  Some of those decisions required that the individual selected be able to hit the ground running.  In other cases I wanted someone who the organization could train and mentor into a high performer.  In short, I was looking for specific skills and skill levels.

Further, in each case, it was critical that I was “right”.  The cost of being wrong is very very high.

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I’m at the beach this week. And, having taken vacations where we stay at a condo or a townhouse or a room with a kitchen before, we are working really hard to keep it “all in the family” by eating meals that we have cooked together.  Tonight was steaks on the grill.

In the community that we are staying, gas grills are prohibited.  In fact, charcoal grills are the only type allowed and even they are restricted to the “grill zone”.  That is, a very pleasant little area with 3-4 grills complete with seats, and a deck and plenty of room for co-grillers to meet and greet.

Tonight was a full house.

Three of us dad’s were grilling tonight and we began with the usual introductions.  Each of us was recently arrived and as such, we felt compelled to entertain conversation – we being neighbors for the next week or so.  As always in the “man way”, we began to introduce ourselves through our work, or career.

One guy ran a company that manufactured ball caps.  The other ran a boutique wine and cheese shop.  Me, I just work for the man.

We talked about the rain, the weather, women and kids.  We laughed over beers and burnt chicken.  We swapped stories and matches.  All nonsense talk really, just fillin’ time the way men do until they realize that the end is apparent.  That time in the conversation when we can reasonably claim we have to leave and still save face.  When that time comes, the conversation turns serious.

We all three began to gravitate to the economy and “the way things are”.  Now mind you, I have no idea these men’s name.  I have never seen ’em before in life and likely won’t even see ’em again here.  But we all three agreed that:

  1. A reasonable society should help each other out.
  2. That help should not create dependence.
  3. We have long ago crossed that line.
  4. Where unemployment benefits are concerned, we would be better off deciding how many weeks is enough and just lump sum the check.

I swear to gawd this is true.  I find more like minded people wherever I go.  This nation isn’t broke.  This nation is being managed by the morally inept.  By the intellectually inept.  By the spiritually inept.  Every single person I know and talk to understands that what our government is doing is buying votes.

The rest is just chit chat.

As I write this it occurred to me that my specific audience was perhaps biased; two business owners and a massive free market corporate lackey.

Then it occurred to me that perhaps there is something to be said about the fact that these individuals find themselves gathered in a rental community on the beaches of North Carolina for a week.  Maybe what successful people think matters.  Maybe when Michael Jordan advices about basketball people should listen.

Maybe.

I think it’s important to clear a few things up.  And to explain the difference between personal charity and legislative responsibility.

On a human and personal level I get the fact that someone out of work is struggling.  Most likely with personal value issues, household income issues and perhaps larger life skills and career opportunity issues.

I get that.

And to that extent, I resonate with the personal heart string tugging concept of needing to provide relief.  I absolutely agree that helping when one can is the right thing to do.  Without a doubt.

On the governmental and legislative level I know that the best thing that can be done is to make sure that it is as easy as possible for people  looking for work can match up with people looking for workers.n  In short, for the removal of every possible obstacle.

The juxtaposition of those two very valid and noble positions seems to be taking place in our debate.

The fiscal conservatives want less unemployment benefits to be handed out.  Less as in fewer weeks and less money.  The social  liberals want to increase those benefits.  Increase as in extend benefits and with more money.

And they yell at each other.

But they aren’t arguing about the same topic.  The Left are advocating a position of personal charity.  The Right are advocating a position of economic modeling.  Both are right in their specific context, but that context isn’t the same.

So, I would suggest this:

  • My Liberal friends:  Form a non-profit foundation that provides relief to the unemployed.
  • My Conservative friends: Contribute to said foundation.
  • End government mandated charity.

Remember, there must be an incontrovertible condition for the government to relive a man of the fruits of his labor by threat of sword or gun.  And the simple fact that you feel more comfortable with this man having that man’s property does not meet that condition.