John Boehner thinks we’ve made it too easy for the unemployed to go without work. Addressing the conservative American Enterprise Institute last week, the Speaker of the House criticized “this idea” among the jobless that “I really don’t have to work. I don’t really want to do this. I think I’d rather just sit around.” To Boehner, our policy has corrosively enabled those inclined toward sloth to give way to that temptation.
This theorizing has been roundly blasted in liberal circles. Paul Krugman characterized it is a revealing gaffe, exposing conservative disdain for the unemployed. Simon Maloy at Salon said that Boehner had gone off the reservation, drifting off-message from efforts by those like Rep. Paul Ryan to move away from (or at least better conceal) makers/takers rhetoric and knee-jerk distaste for the jobless.
But few have discussed the absolute wrongheadedness of Boehner’s policy diagnosis here. He believes that it’s too easy to stay unemployed. The implication is that public policy should make it harder to be unemployed by, say, cutting off unemployment insurance benefits earlier and making benefits stingier to begin with. This, it’s thought, would give these slackers the kick they need to go out and work.
Never mind that unemployment benefits are already unavailable to the vast majority of the unemployed and already historically stingy. As Krugman explains, “Only 26 percent of jobless Americans are receiving any kind of unemployment benefit, the lowest level in many decades. The total value of unemployment benefits is less than 0.25 percent of G.D.P., half what it was in 2003, when the unemployment rate was roughly the same as it is now.”
Yet the idea that our lavish unemployment benefits drive up unemployment rates persists among conservatives. And it persists in the face of clear evidence to the contrary.
For one thing, unemployment benefits vary drastically from state to state. States aim to replace some portion of an unemployed person’s lost wages. Maximum benefits range from Mississippi’s $235 per week to Massachusetts’s $1,019.
If the Boehner Hypothesis had something to it, we might expect to see lower unemployment rates in states providing the stingiest unemployment benefits. But in fact, Mississippi has 7.9 percent unemployment, one of the highest in the country. And Massachusetts has 5.8 percent unemployment, lower than the national rate.
The Federal Reserve recently studied whether extending unemployment benefits had any effect on the unemployment rate. During the recession, the federal government extended funds for state unemployment benefits. These emergency measures made benefits available to those without jobs past the usual 26 weeks of unemployment to as many as 99 weeks. Conservatives regularly fretted that this weakened the incentive to find work, frequently obstructing extensions to provide more help to the jobless.
The Fed, however, found that these extensions had a minimal impact on the unemployment rate and virtually no impact on the number of people participating in the workforce. “[T]he overall effect of EEB [emergency extended benefits] on the unemployment rate is fairly modest; at its peak (in terms of the average number of benefit weeks provided) EEB boosted the unemployment rate by one-third percentage point.” Moreover, “the effect of EEB on the [labor force] participation rate is estimated to have been quite small.”
This is just the latest piece of evidence refuting the Boehner’s Bootstraps Hypothesis. James Pethokoukis at the American Enterprise Institute helpfully summarized a series of studies that found similar results. One study by the Boston Fed found that cutting off unemployment benefits didn’t nudge people to find work, but rather made them “more likely to drop out of the labor force; transitions to a job appear to be unaffected by UI benefit extensions.”
Another study compared the tellingly similar results in North and South Carolina. Last summer, North Carolina slashed its unemployment benefits so severely that it made itself ineligible for federal emergency unemployment extensions. Mirroring the Red State rejection of ObamaCare’s free Medicaid expansion, North Carolina effectively spurned free federal support for its own long-term unemployed.
Economist Justin Wolfers found that since North Carolina cut its benefits, its economy has fared no better than neighboring states with similar economies that didn’t slash benefits for the unemployed. South Carolina, for instance, has seen slightly faster employment growth that North Carolina has. Contrary to the conservative bootstraps theory, North Carolina doesn’t stand out at all from similar states despite its experiment in inflicting hardship on the long-term jobless. “The bottom line,” Wolfers concluded, “is that North Carolina looks quite similar to its peers, and certainly not better.”
The irony is that Pethokoukis’s work comes from the very think tank before which Boehner continued to cling to his disproven theory of what ails the unemployed. The lesson, I suppose, is that Boehner would do well to survey the work from the forums he speaks at.
And he’d do well to heed Pethokoukis’s conclusion that the “safety net supported American incomes during the recession and its aftermath” — jobless benefits included. It’s time we lay to rest the conservative notion that the jobless need constant work incentives, and maybe instead just need some financial support to help them afford things like Internet, new suits, dry-cleaning, resumes — you know, things that cost money that help people find a job.
Instead of moralizing against the unemployed, we should understand that unemployment insurance plays an important role in helping people through hard economic times. The unemployed don’t need a kick in the pants to help them find work, they need a stronger economy. And that comes when everyone — the jobless included — has a little more spending money in their pockets.