addressed worsen day by day, with change looking only downward.
Ed
http://www.nytimes.com/2010/07/05/opinion/05krugman.html?th&emc=th
Punishing the Jobless
By Paul Krugman
NY Times Op-Ed: July 5, 2010
There was a time when everyone took it for granted that unemployment
insurance, which normally terminates after 26 weeks, would be extended in
times of persistent joblessness. It was, most people agreed, the decent
thing to do.
But that was then. Today, American workers face the worst job market since
the Great Depression, with five job seekers for every job opening, with the
average spell of unemployment now at 35 weeks. Yet the Senate went home for
the holiday weekend without extending benefits. How was that possible?
The answer is that we're facing a coalition of the heartless, the clueless
and the confused. Nothing can be done about the first group, and probably
not much about the second. But maybe it's possible to clear up some of the
confusion.
By the heartless, I mean Republicans who have made the cynical calculation
that blocking anything President Obama tries to do - including, or perhaps
especially, anything that might alleviate the nation's economic pain -
improves their chances in the midterm elections. Don't pretend to be
shocked: you know they're out there, and make up a large share of the G.O.P.
caucus.
By the clueless I mean people like Sharron Angle, the Republican candidate
for senator from Nevada, who has repeatedly insisted that the unemployed are
deliberately choosing to stay jobless, so that they can keep collecting
benefits. A sample remark: "You can make more money on unemployment than you
can going down and getting one of those jobs that is an honest job but it
doesn't pay as much. We've put in so much entitlement into our government
that we really have spoiled our citizenry."
Now, I don't have the impression that unemployed Americans are spoiled;
desperate seems more like it. One doubts, however, that any amount of
evidence could change Ms. Angle's view of the world - and there are,
unfortunately, a lot of people in our political class just like her.
But there are also, one hopes, at least a few political players who are
honestly misinformed about what unemployment benefits do - who believe, for
example, that Senator Jon Kyl, Republican of Arizona, was making sense when
he declared that extending benefits would make unemployment worse, because
"continuing to pay people unemployment compensation is a disincentive for
them to seek new work." So let's talk about why that belief is dead wrong.
Do unemployment benefits reduce the incentive to seek work? Yes: workers
receiving unemployment benefits aren't quite as desperate as workers without
benefits, and are likely to be slightly more choosy about accepting new
jobs. The operative word here is "slightly": recent economic research
suggests that the effect of unemployment benefits on worker behavior is much
weaker than was previously believed. Still, it's a real effect when the
economy is doing well.
But it's an effect that is completely irrelevant to our current situation.
When the economy is booming, and lack of sufficient willing workers is
limiting growth, generous unemployment benefits may keep employment lower
than it would have been otherwise. But as you may have noticed, right now
the economy isn't booming - again, there are five unemployed workers for
every job opening. Cutting off benefits to the unemployed will make them
even more desperate for work - but they can't take jobs that aren't there.
Wait: there's more. One main reason there aren't enough jobs right now is
weak consumer demand. Helping the unemployed, by putting money in the
pockets of people who badly need it, helps support consumer spending. That's
why the Congressional Budget Office rates aid to the unemployed as a highly
cost-effective form of economic stimulus. And unlike, say, large
infrastructure projects, aid to the unemployed creates jobs quickly - while
allowing that aid to lapse, which is what is happening right now, is a
recipe for even weaker job growth, not in the distant future but over the
next few months.
But won't extending unemployment benefits worsen the budget deficit? Yes,
slightly - but as I and others have been arguing at length, penny-pinching
in the midst of a severely depressed economy is no way to deal with our
long-run budget problems. And penny-pinching at the expense of the
unemployed is cruel as well as misguided.
So, is there any chance that these arguments will get through? Not, I fear,
to Republicans: "It is difficult to get a man to understand something," said
Upton Sinclair, "when his salary" - or, in this case, his hope of retaking
Congress - "depends upon his not understanding it." But there are also
centrist Democrats who have bought into the arguments against helping the
unemployed. It's up to them to step back, realize that they have been
misled - and do the right thing by passing extended benefits.
***
http://www.nytimes.com/2010/07/03/opinion/03herbert.html?th&emc=th
A Jobs Program That Works
Bob Herbert
NY Times Op-Ed: July 2, 2010
Is it possible that there is a federal stimulus program that is putting many
thousands of struggling individuals to work and is getting rave reviews not
only from Democrats but from officials in conservative states like South
Carolina and Mississippi?
It may be hard to believe, but it's true. The program, part of the American
Recovery and Reinvestment Act, allows states to use federal dollars to
temporarily subsidize the salaries of individuals placed in private- and
public-sector jobs. More than 30 states are participating.
The program, though small, appears to be working exceptionally well. States
expect to have placed more than 200,000 individuals by this coming autumn.
Some of those workers would otherwise have landed on welfare.
The catch - there is always a catch - is that the program will expire at the
end of September if Congress does not act to extend it.
The U.S. is trapped in an agonizing period of sky-high unemployment and the
latest data from the Department of Labor offers no cause for optimism. A
program that is actually putting people to work, and thus helping families
fend off destitution, ought to be looked at closely for what it can teach us
about employment expansion. It makes no sense to simply let it die.
States have embraced the subsidy program with tremendous enthusiasm. "It has
been amazing," said Linda Martin, director of South Carolina's Division of
Family Assistance. "I think at this point we're kind of astounded at how
well it's working."
The federal money is made available through the $5 billion TANF (Temporary
Assistance for Needy Families) Emergency Fund. States can use the money in a
variety of ways, and many have found the subsidized employment approach to
be the most efficient and effective.
South Carolina uses the money to cover 20 hours a week of employment at the
minimum wage for each individual who is placed in a job. The subsidy lasts
for six months.
To the surprise of state officials, private employers across a wide front
have welcomed the program. The employers sign an agreement to keep the
workers on after the subsidy runs out if there are no serious problems with
the workers.
"We are placing people in the kinds of jobs we were never able to crack
before," Ms. Martin told me. "They're getting jobs with a large grocery
chain, and with McDonald's, Wal-Mart, CVS pharmacy. We actually have more
employers asking for placements than we have eligible folks to be in those
jobs."
This is not the kind of job creation that will break the back of the
nation's
employment crisis, but it has succeeded in bringing down the welfare rolls
in South Carolina, which were heading straight up at the height of the
recession. It is keeping food on the tables of seriously strapped families.
And it is offering work experience to some people who have not had a lot of
it.
Other states have adopted a different approach. Mississippi has made it a
priority to find jobs at small businesses. The subsidy there covers the full
salary for the first two months and then gradually declines to one-fourth of
the worker's salary in the sixth and final subsidized month.
Gov. Haley Barbour has called for an extension of the program, which he said
has provided "much-needed aid during this recession."
LaDonna Pavetti, who monitors the program for the Center on Budget and
Policy Priorities, described it as the "best-kept secret" of the federal
stimulus effort. Illinois, she said, is placing 500 people a day in jobs
under the program. The crush of job-seekers trying to get in has been so
great that state officials have had to stop taking applications.
In Los Angeles alone, 10,000 people have been placed. There have even been
600 job placements in Montana.
Ms. Pavetti's worry is that without more attention being paid to this
effort, it will vanish at the end of September. That, said Mark Zandi, chief
economist at Moody's Analytics, would be "particularly inopportune given
that unemployment will likely still be in or near double digits, and more
workers will have exhausted their benefits."
He recommended extending the program for another year.
There has been a peculiar reluctance in this country to move full speed
ahead on all feasible ways to increase employment, which is what is needed
to get the economy back in shape, to begin reducing budget deficits, and,
most important, to alleviate the suffering that so many individuals and
families are enduring.
I asked Ms. Martin of the Division of Family Assistance in South Carolina
what would happen in her state if the job subsidy effort were allowed to
lapse. She didn't hesitate: "It would really just kill us if we had to shut
this down," she said.
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