Wednesday, December 8, 2010


Senator Jim DeMint (R - South Carolina) has come out against the tax cut deal that President Obama has worked out with the Republican leadership. One of his main reasons for this stance, the fact that it will increase the budget deficit makes perfect sense. But some of his reasoning is a little dubious.

I don’t think we need to extend unemployment any further without paying for it, and without making some modifications such as turning it into a loan at some point. It then encourages people to go back to work.
This is one of the common Republican objections to extending unemployment - that my making it less painful to be out of work, the incentive to do whatever it takes to get a job is lessened. But unless Senator DeMint is hoping that some people (Democratic voters, more than likely) simply leave the country entirely in their quest for jobs, one wonders just what exactly the incentive of looming poverty is expected to accomplish.

In "Read This Shirt" in the July 24th-30th issue of The Economist, which deals with the fight over unemployment benefits in Congress, a chart is presented that shows that as of the end of the first quarter of 2010, there were just shy of 5 unemployed people per job opening. (But I'm not sure if this is being measured against the official unemployment rate - other statistics in the article are - or against the overall number of workforce-eligible but unemployed persons.) What proponents of the "unemployment benefits cause malingering" philosophy never seem to get around to answering is why they expect that ending unemployment benefits - or reforming them into loans that must be repaid - would reduce the ratio of unemployed people to job openings. According to a study by the Federal Reserve Bank of San Fransisco, about 5% of the officially unemployed (the unemployment rate was about 10% at the time) were taking it easy because of access to unemployment benefits.

If we work under the assumption that none of the job openings identified in the Bureau of Labor Statistics data mentioned in the Economist article are due to the inability to find qualified candidates, it might be worthwhile to presume that you could reduce the number of open positions to 0 by cutting off access to other means of support for the unemployed. But that would still leave more than 75% of unemployed people high and dry.

I may have mentioned this before when writing about this topic, but I have yet to encounter anyone who disputes the BLS numbers. So either Senator DeMint is willing to punish the majority of the unemployed to lever those that can find work to to do whatever it takes to get what jobs are out there, or he knows something that the rest of us don't. The only thing that comes to mind off the top of my head is that businesses are holding jobs back, due to wage rates being too high for their liking. Once the oversupply of labor pushes people into being willing to work for mush less than they would otherwise, employers will unveil these jobs, and offer them to the public. It is, essentially, a game of chicken, with the wealthy betting that they can wait out the public with the help of conservative lawmakers who begrudge the populace any policies or conditions that work against a factory-friendly business environment.

It's possible that Senator DeMint honestly believes that a factory-style business environment, where the public serves mainly as a labor force for businesses that charitably allow people to work for them, is the single best exemplar of Capitalism and the best thing for modern Democracy. I suppose it beats thinking that he's a cynical bastard who is deliberately playing out an active prejudice against the poor and middle-class. But sooner or later, we need to pin him, and his allies, down on just what they plan to do to increase the number of available jobs out there to be had, rather than simply resting on the idea that the public is lazy and needs to be whipped into shape.

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