The Structural Unemployment Canard

    With the failure of the super committee-not necessarily a bad thing, two important pieces of legislation for President Obama hang in the balance-this is the bad part of it. His desire for an extension for both this year's payroll tax holiday and unemployment benefits.

    When he initially proposed his American Jobs Act there were a number of items in the proposal the Republicans have in the past supported-the employer side of the payroll tax holiday and the idea of federal funded job training-but not surprisingly nothing has happened while as usual we sit in gridlock. While GDP estimates have improved for year 2012 to 2.4 percent GDP failure to extend these measures threatens to cut into this estimate.

    The Republican position stands between two poles-on the one hand only even being willing to consider something that could possible be a supply side stimulus and on the other arguing that unemployment is mostly structural and any attempt to alleviate it will do more harm than good-yet if that's true then at least job training could be promising as a number of manufacturing companies have new highly skilled jobs that require more Americans to be competent in math and engineering.

    Overall, though, the GOP continues to think a bad economy is their trump card. The structural argument is being used against extending unemployment benefits.

    As RortyBomb shows the claim that extending unemployment benefits raises unemployment ignores the jobs that extending them creates.

    "0.4% of the labor force is 154 million people, so that 0.4% turns into 616,000 more people who are unemployed because of unemployment insurance."

    "Remember Evans is talking about the supply of labor. That’s only half the story.  According to the latest CEA report, The Economic Impact of Recent Temporary Unemployment Insurance Extensions, extending unemployment benefits has created 793,000 new jobs.  This number is more than the number of unemployed it has discouraged from taking a job, so the net effect has been to create jobs."

    http://rortybomb.wordpress.com/2010/12/10/kelly-evans-on-unemployment-insurance-in-the-wall-street-journal/

     Really the idea that unemployment benefits are so cushy that beneficiaries would rather soak them up forever than get a job is plausible only to those wholly out of touch with reality-members of the .001 percent OWS is protesting against. As someone who is currently on unemployment I make far too little to even pay for a week's cost of living. I make $144 off of it. Believe me I'm not going to retire to the good life anytime soon. The structural people can only make these arugments because they are so far out of reality. It's like the idea that voluntary unemployment if impossible in their models-until Keynes no one believed it was possible to over the long haul desire and yet not get a job.

     It is true though that there are some jobs that you could argue aren't worth me getting while I receive this princely sum. For example if I got a job at Dunkin Donuts for $7.25-the minimum wage Sumner worries is too high-and work 15 hours a week(that is likely what they'll give me if they like me; believe me today you don't get many hours if your new in a service job) I'd get about $108 a week before taxes. After taxes it would be close to only half of the $144 a week. If that's the kind of unemployment the structuralists worry about many they should apply for the job.