American Elephants

The 2014 Employment Miracle: Due to The Cut In Benefits by The Elephant's Child

hiringLets assume that your company has a big layoff, and you get a pink slip.. Your job is gone. What do you do? Some people go on vacation, They need time to reassess, get their heads on straight, think things through. Others go right down to file for unemployment benefits. Most  people will be looking for another comparable job, or one that’s even a little better, and the weeks and months go by….

Obama has been saying for the past couple of months  that 2014 has seen impressive improvement in the labor market— the best year in job creation since 1999, he points out proudly. He has naturally credited his policies, but any justification or rationale is missing. Unfortunately, the improvement in job creation seems to be due to the expiration of a program that the Democrats were fighting to renew.

It seems that it is not a result of Obama’s “Middle Class Economics,” an undefined and unexplained version of economics, dreamed up by Obama himself. The problem is the usual one when dealing with the Left — they don’t understand incentives.

A new  paper from the National Bureau of Economic Research contends that the ending of federally extended unemployment benefits across the country at the end of 2013 explains much of the labor-market boom of 2014.

When you’ve been looking for a job for some time, you settle in to a discouraged passivity. You are required by law to prove that you are looking, but you have half given up hope. Politicians on the Left always want to be helpful and encourage the unemployed to rely on the government. The “better world” they envision as a result of their policies is a grand vision where the needs of the people are fulfilled entirely by the benevolent  government which leaves the people free to create and paint, invent, compose. (Surely you remember Nancy Pelosi not long ago, advancing just that plan).

Sometimes people need a kick in the pants to get them moving, and an end to extended unemployment benefits does it. You may have to take the job you can find, rather than the job of your dreams. (See Mike Rowe) And that is what explains the labor-market boom in 2014 —1.8 million jobs can be attributed to the end of the extended-benefits program. It suggests that long-term unemployment benefits could have played a big role in the ongoing procrastination-passivity of the labor markets. Adults who are quite familiar with the technique when dealing with their children — tough love— may still be opposed to it for adults.

Congress repeatedly authorized federal extensions that allowed people to draw benefits much longer. The Obama administration was predicting that the drop-off in stimulative spending (the government gives money to the unemployed, they spend the money, that money circulates in the economy, magically multiplying as it goes) would cost 240,000 jobs. The NBER paper finds that it created 1.8 million jobs. The economics of the Slowest Recovery has been not Obama’s Middle Class economics, but discredited Keynesian economics which has never worked.

%d bloggers like this: