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 Post subject: Incentives Not to Work
PostPosted: 14 Apr 2010, 10:04 
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http://online.wsj.com/article/SB1000142 ... ns_opinion

APRIL 13, 2010

Quote:
"The second way government assistance programs contribute to long-term unemployment is by providing an incentive, and the means, not to work. Each unemployed person has a 'reservation wage'—the minimum wage he or she insists on getting before accepting a job. Unemployment insurance and other social assistance programs increase [the] reservation wage, causing an unemployed person to remain unemployed longer."

Quote:
Mr. Summers is merely reflecting what numerous economic studies have shown. Alan Reynolds of the Cato Institute has found that the average unemployment episode rose from 10 weeks before the recession to 19 weeks after Congress twice previously extended jobless benefits—to 79 from 26 weeks. Even as initial unemployment claims have fallen in recent months, the length of unemployment has risen. Mr. Reynolds estimates that the extensions of unemployment insurance and other federal policies have raised the official jobless rate by nearly two percentage points.

Quote:
Or perhaps the Senate should listen to another Obama Administration economist, Alan Krueger of the Treasury Department, who concluded in a 2008 study that "job search increases sharply in the weeks prior to benefit exhaustion." In other words, many unemployed workers don't start seriously looking for a job until they are about to lose their benefits.

Quote:
But do these Senators really think it's compassionate to give people an additional incentive to stay out of the job market, losing crucial skills and contacts? And how politically smart is it for Democrats to embrace policies that keep the jobless rate higher than it would otherwise be? How many Democrats share Mr. Harkin's apparent desire to defend a jobless rate near 9% (today it is 9.7%) in the fall election campaign.


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PostPosted: 14 Apr 2010, 20:08 
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Hmm.

Of course, it might be interesting to know the unknowable: How many are looking seriously and just can't find a job?

Statistics are fun... :imeter:


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PostPosted: 14 Apr 2010, 23:11 
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Currently on unemployment myself. The effect of having the insurance to me is more about not suddenly losing everything I own while I try to find something else and giving me enough money to pay for what I need to get interviews done. It also raises my incentives not to take a poorly paying job while still looking at jobs that better fit my qualifications; in the face of actually not making any money I would aim for a lower paying job, although, as past experience has held, those jobs often I also over qualify for and the job offers will notice this in interview or resume and not want me...

Being that if I am overqualified for a poorly paying job, I will quickly skip out when a higher paying job appears that I can do.

Unemployment insurance actually requires attempts to nab a job at least 2 days a week. With paper cheques written logs of contacts and what the person did; with online submissions the same, but only during random audit. I've never had a random audit yet (been only 7 weeks) but I guess it could happen. They'd see I'm trying at least.

It will run out. I haven't quite checked when, but I'd like to treat it like it'll run out sooner than later because it doesn't exactly come with (1) health insurance or (2) stability. :compress:

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PostPosted: 15 Apr 2010, 05:21 
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I just wrote a nice long post about how there will always be high unemployment in a recession, and there will always be recessions, and the vast majority of people are not just trying to get a free ride, and my keyboard deleted it. Oh well, can't be arsed now. :lol: :roll:

Yeah I so love living off ~$105 a week in American money, it's so super fantastic.

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PostPosted: 15 Apr 2010, 05:31 
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HavenMage wrote:
Hmm.

Of course, it might be interesting to know the unknowable: How many are looking seriously and just can't find a job?

Statistics are fun... :imeter:


About 99% in the UK, still that small percentage of money does cost governments a great deal of cash so its probably best to admit and be realistic about unemployment, and try and minimise dole scroungers who really help no one but themselves.

http://www.guardian.co.uk/politics/2010 ... -crackdown

Quote:
"Benefit fraud is at an all-time low, costing £1.1bn a year – less than 1% of claims. Overpayments cost £1.9bn a year, underpayments £1.2bn and £16bn goes unclaimed which should be helping the poorest households. Rather than recycling myths about 'benefit scroungers', we want all the parties to pledge to tackling error and helping those who are entitled get the support they need by making the system simpler and easier to understand."

Hussain said tax fraud was a bigger challenge. "The truth is that tax fraud is a much bigger issue for the public finances. Every year £15bn is lost to tax fraudsters, which could be making a major difference to Britain's poorest families who have been hit hardest by the recession."


I'd worry more about tax fraud in businesses, which costs this country far more. There are some extremely wealthy people who will not even keep there money in their own country because they don't want to pay tax on there savings and that is legal, I dread to think how many people are exploiting loopholes, embezzling funds, or just avoiding taxes altogether.

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May the road rise up
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May the wind be always
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May the sun shine warm
upon your face
May the rain fall soft
upon your field,
And until we meet again.
May God hold you in the palm of his hand.


"I apologise... For nothing!"


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PostPosted: 15 Apr 2010, 07:56 
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I have only one thing to say The Dagda: Amen.

Sometimes that word just sums it up for me.


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PostPosted: 15 Apr 2010, 09:11 
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It may be true that, statistically, extended unemployment benefits increases the unemployment rate. BUT, numbers on a page don't convey what is happening with real people living their real lives. You don't want to paint those who are making a genuine effort to find work or to improve their skills through further training with the same brush as those who are genuine deadbeats. Any social safety net will always have a certain amount of fraud and abuse. The best you can do is to try to minimize it.


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PostPosted: 15 Apr 2010, 18:25 
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Zebulon wrote:
It may be true that, statistically, extended unemployment benefits increases the unemployment rate. BUT, numbers on a page don't convey what is happening with real people living their real lives. You don't want to paint those who are making a genuine effort to find work or to improve their skills through further training with the same brush as those who are genuine deadbeats. Any social safety net will always have a certain amount of fraud and abuse. The best you can do is to try to minimize it.

This is an accurate portrayal of my take.

While extending benefits may have the effect of depressing overall employment; one of the more important questions on approach needs to be less about affecting unemployment rates directly by giving people something to stand on between jobs and preventing otherwise useful workers from having their financial stability ruined in the face of their own extended unemployment. Things like credit card culture have done more damage to employment and individual financial solidarity than unemployment benefits.

Malingering will happen, offering more benefits will certainly increase malingering; but the risk/cost analysis doesn't hinge on unemployment rates themselves, there's so many other factors involved like the quality of life of otherwise available workers, their ability to gain and harness new skills (while unemployed), their ability to keep seeking employment rather than ending up on the dole and while barely able to scrape by fall behind their own profession, etc. :compress:

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