Obama’s Jobs Bill: A Reasonable Plan

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Here are some quick thoughts on President Obama’s jobs plan:

- It’s reasonably big, at about 3% of GDP.

- It’s reasonably front-loaded. Goldman Sachs says it will raise 2012 GDP by about 1.5%–before any multiplier effects. Moody’s chief economist Mark Zandi thinks the effect on 2012 GDP will be about 2%. Expect more estimates in the 1-3% range for 2012; smaller for 2013.

- It’s reasonably well targeted. Unemployment insurance extensions will get spent. Infrastructure money gets spent and also builds stuff. As for the payroll tax: Who knows if it gets spent, but the point is to stimulate hiring, rather than spending.

- It’s reasonably well designed. The biggest problem with a payroll tax is that firms get it even for employees already on the books. But this time, the biggest payroll tax cut is only for firms raising their payrolls. This will yield a much bigger bang-for-each-buck. Early analyses have yet to realize how important this is.

- It’s reasonably timely. The usual argument against fiscal policy is that the spending only occurs by the time the economy is booming again. There’s no chance of that occurring. Perhaps this provides the confidence boost we need to counter double-dip concerns.

- It’s reasonably well focused. Tax credits for hiring the long-term unemployed will be very helpful in preventing the current recession doing long-term harm.

- It’s reasonably clever, removing the incentive to fire people, rather than reduce hours. (aka “Job sharing”)

- It’s reasonably evidence-based. Having the unemployed talk to a jobs counselor before extending benefits can have huge effects at minimal cost.

All told, it’s a very real plan and very specific. None of this is magic: Government gets more active when the market fails, and we pay it back when the market booms. This is all standard economics. There’s no gold-buggery, voodoo austerity or laughable Laffer-y. Obama’s not making up economics, he’s using simple tools to solve the obvious problems. And with long-term real interest rates close to zero, there’s no risk of this crowding out private investment

But let’s not expect miracles. Without the plan, GDP growth was expected to be so anemic that unemployment was expected to rise through 2012–partly due to the drag of reduced government spending in coming years. Obama’s plan eliminates this fiscal drag, but the economy has still gotta get its mojo back. So perhaps the long malaise turns in to the tepid recovery. But perhaps the Fed can help, too.

The biggest risk is that this plan provides another opportunity for Congress to prove itself incapable of addressing real macroeconomic concerns. If it does, watch for confidence to plummet just as it did following the debt-ceiling madness.

As for the politics: Ask a political scientist. But I wouldn’t want to have to explain a vote against this to my constituents, who are mad as hell about unemployment.

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  1. Bradley C. says:

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    • Jeff says:

      S&P downgraded the US. Moody’s did not.

      But it’s okay, you can have an opinion without being informed.

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      • Bradley C. says:

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      • Michael B says:

        You are so frustrating. This isn’t an ideological game, and people who know more than you think it will work. If you don’t know the difference between commercial paper and sovereign debt, don’t chime in.

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      • ElmerFudd says:

        Does the President know the difference?

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      • russell says:

        “…people who know more than you think it will work.”

        that’s the problem right there. there are people that think they can push a few buttons and control 300 million people and a $14 trillion economy. that’s laughable, and i think the past few years have shown that pretty well.

        that is, as hayek said, the fatal conceit of people like obama.

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      • Justin B. says:

        Moody’s did not downgrade because it rates different things. The S&P rates the chance of a default at all. Moody’s rates how much return investors will see if a default occurs, because Moody’s believes that the US government will still pay back all bonds (even if they default and thus do so late), they remain of the belief that the US as a whole deserves a AAA rating.

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  2. keith says:

    To Bradley’s point – the money has to come from somewhere. And it’s coming from money in the next ten years, using policies that can be overturned by the next president, or the president after.

    It’s a “good idea” but all it’s doing is saying “…by spreading the cost down the road, where we may or may not have the money.”

    To my understanding – it’s also about repealing the tax cuts (or, in the GOPs eyes, increasing taxes) to generate some income, which people freak out about because they say that will “hinder job growth, if the rich can’t keep getting richer, what incentive do they have to increase employment?” Which, to me, is a fallacy, since despite having all this wealth, they still prefer to cut jobs to keep profits high instead of cutting profits to keep unemployment down. After all, we all know the point of the game is to make as much money as possible, at the expense of everyone else in the end, right?

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    • Deron says:

      It’s interesting to me that there seems that we’ve been ignoring a political debate in this country on where jobs truly come from.

      Part of the populace believe they’re handed down by the rich as a reward for policies that insure that wealth. Jobs trickle down, I guess?

      The other part believe that jobs come from the demands of middle class purchasers who want goods and services. A middle class with spare change will keep the economy moving.

      The first group seem to be winning the debate. The second group might have a case, but nobody seems interested in making it.

      I’m inclined to believe that the rich will be rich and will get rich regardless. The other side of the coin to, “the poor you will always have with you.” Will we always have a middle class?

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      • Bradley C. says:

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      • James says:

        “…jobs come from the demands of middle class purchasers who want goods and services.”

        The problem here is that most of the middle class already has everything it could reasonably want (and pay for without moving into the super-rich class). In fact, part of the problem of the last decade is that the middle class was persuaded by advertising to buy quite a bit more – more house, more car, more toys – than it could either use or expect to pay for. So the junk was bought on credit, on the assumption (for those that even thought about it) that rising home equity &c would magically pay off the debt someday.

        The last couple of years have taught at least some members of that “you can purchase your way to happiness, on credit” middle class that they really don’t need, and often don’t really want, a lot of that “stuff” they were buying. So the question is, how to re-start an economy that doesn’t depend on this excess purchasing to provide jobs that let people buy stuff so people will have jobs making the stuff… Seems like investment in infrastructure is about the only way.

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      • Bradley C. says:

        Almost a thumbs up, until the last line…not a horrible way to spend but IMO picking a winner while pandering to segments of voters which seems like a thinly veiled vote buying scheme. Don’t get me wrong, he isn’t breaking new ground with this tactic, it’s a bi-partisan problem.

        The only way to restart this economy is to press the reset button. You know how it feels when you’ve been working on something for a while on your PC (maybe back in the day when this was much much worse) and everything would just lock up. The only option was the dreaded reset button. Everyone always warned you “never press the reset button, Windows doesn’t like that”. Well most of the public isn’t going to like it either but we’ve gone so far down this road, hammering on the CTL ALT DEL keys for the past 10-12 years that I’m afraid there’s no other way. Yes, there will be pain. And no, it will not be fun. And I’m guessing that it won’t even feel like it’s “fair”. But, neither is life.

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      • Zack says:

        “Press the reset button”? What does that even mean? French Revolution style, with guillotines and everything? Or maybe it’s more of a Communist Revolution, where we take everything owned by everyone and deal with it that way? Or maybe you’d rather slash government down to nothing, since that whole lack of regulations certainly helped us avoid this mess or the one we had in the 30s?

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      • Bradley C. says:

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      • Enter your name...davboz says:

        “Will we always have a middle class?”

        …which brings us right back to decades of gov. policy, intervention, mis-regulation, and intervention. Fannie, Freddie, EPA, Congress, energy, tax, business policy by those who know little about those areas, esp. economics.

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    • steve says:

      “the money has to come from somewhere. And it’s coming from money in the next ten years,”

      While literaly true, it is not an argument against the statement that the stimulus is just taking from one pocket and putting it another. Money is a claim on goods if spent now that means current goods. No one is aquiring their groceries from ten years in the future.

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  3. John says:

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    • Bradley C. says:

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    • caleb b says:

      @John

      Remember when folks tended to operate squarely with one another? With rectitude and a sense of level equality? When fraternal bonds were more common, and there was a sense of obligation to others?

      Our nation was founded on ancient principles like these, but I feel as if they have been lost as years past.

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    • Min says:

      Seriously? Are we really returning to the failed “bleed them out” leech policies of the Depression? Are people seriously talking about forgetting everything we learned in the last 75 years?

      I mean, I guess I shouldn’t be surprised, since many are seriously advocating the return to the gold standard, but it’s still disheartening. Why can’t we base policy off empirical evidence and science instead of blind ideology like the idea that the government can’t help or that leaving free markets alone will fix everything?

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      • Brendan says:

        What emiprical evidence? Though many would love to believe it, economics is not an empirical science. It’s a predictive science that is full of ideology and is making progress towards empiricism but is far from it. However, the empirical evidence shows that keynesian economics is largely wrong and Friedman is largely correct.

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      • Zack says:

        Seriously. It amazes me that people actually believe leaving the free market alone actually works out in our favor. The free market doesn’t give a shit about anyone; it’s based solely on greed and self-preservation. Given enough time, it allows wealth to accumulate in very few hands, which has never helped make society a better place. Monopolies used to be seen as the destroyers of competition and innovation that they were, but over the past 30 years they’ve managed to convince us of the opposite. It makes my stomach curl.

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      • russell says:

        do you operate on some principle other than greed? does obama? does congress?

        when you negotiated your salary (assuming you have a job) did you agree to take the lowest salary possible?

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  4. Alex says:

    Still looking for empirical evidence that this can work. Shouldn’t we never have been in this depression to begin with under the Kenyesian logic? I mean we had massive deficit spending already.

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    • Joshua Northey says:

      Deficit spending doesn’t magically erase the massive mal-investment we did from 2000-2007. We blew a ton of money on things providing no value.

      2 wars, homeland security, more housing then people could afford, et cetera

      It is smart for the government to save money in good times, and spend it countercyclicly in bad times. Unfortunately our infantile political system is incapable of saving any money.

      So instead we just get the past 10 years of “spend and don’t tax”.

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      • Alex says:

        Doesn’t Paul Krugman, the Godfather of Modern Kenyesianism, advocate a worthless war with imaginary space aliens?

        This alone seems to contradict the idea that the money spent on wars was “wasted”.

        Seriously, is spending only good when some random economist says it is good? Why weren’t those wars stimulating us?

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      • Joshua Northey says:

        I know this is going to sound like rocket science voodoo economics…but here goes.

        Spending is GOOD when it is for things that are useful. It is called investment.

        If the US had say built some functional mass transit in largish cities, or expanded our power transmission infrastructure, or educated former autoworkers and real estate agents with skills that are needed in todays economy, et cetera, then the spending would have been wise.

        When it is used to “fight space aliens”, or blow up little brown people, or topple some random dictator, or build houses out in the dessert that no one wants then it is not well spent, it evaporates.

        The market is very powerful, but it has problems and shortcomings. Governments responsibility it is paper over those shortcomings. It is a lot wiser to try to paper these over with planning and effective investment, then it is by simply wasting money and hoping it all shakes out in the end.

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      • Bradley C. says:

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      • Min says:

        Do you really not recognize the difference between a boom and a bust? Keynsian economics dictates that behavior change depending on how the economy is going.

        When it’s growing and going well, the government uses the extra tax revenue to create surpluses and decrease its debt. You know, the conditions in the US from 2001-2008 (except for the whole saving part, thanks to those in office in that period).

        When it’s shrinking or stagnating and doing poorly, the government spends money in order to stimulate the economy. Which can, of course, come by through wars, though no one advocates war as a good solution; rather, spend the money that would be spent on war doing productive things, like infrastructure. As long as the government spends extra money to help make up for the depressed demand during a recession, it helps to get out of the recession.

        This has been shown time and again through recessions in the 20th century. That’s why it’s part of Macro 101. It’s simple, empirically backed, text book economics. That our policy makers have failed to use it in favor of ideals is appalling, to say the least.

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      • Bradley C. says:

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    • Min says:

      Keynsian economics tells us that we should’ve been running surpluses and cutting our deficit from 2001-2008, when times were good, instead of wasting money on pointless wars and tax cuts.

      It also tells us that the stimulus package needed to be on the order of $2 trillion, or about 3x as much as the meagre $700 billion that was spent. Seriously, the economists were SCREAMING at the politicians when the package was being built that this EXACT THING WOULD HAPPEN: a moderate recovery might occur, but with the limp stimulus, unemployment would remain high, and there would be a chance of a double dip. All this was predicted years ago by Keynsian economists.

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      • Bradley C. says:

        I almost couldn’t decide whether to give this one a thumbs up or one down as ti felt like you were moving in the right direction in the first paragraph…

        IMO government shouldn’t run much of a surplus at all as that would mean they are still taking too much out of the economy and continuing to concentrate power in the hands of a few. This is where Keynesian economics breaks down, it relies on a powerful group of individuals to go against their human nature and make decisions which would not keep them in power (in other words unpopular decisions like not spending money on every pet project that comes along.) If Keynesian economics were even possible we’d hardly need an entire Congress to make these sorts of decisions instead leaving them to a Monarch.

        But it just isn’t so. The founding fathers, in their infinite wisdom, bestowed a limited government model on us, thank god.

        But seriously, $2 trillion in stimulus? Why would that work when the first $700 billion wasn’t even spent before we figured out that it wasn’t doing a damn thing?

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      • Tyler says:

        Bradley, you are such a troll!
        > But it just isn’t so. The founding fathers, in their infinite wisdom, bestowed a limited government model on us, thank god.

        “The founding fathers” had neither “infinite wisdom”, nor were they infallible mystical holy creatures nor even a unified group. There was heavy infigthing and a wide range of opinions and compromise. As the “founding fathers” were not primarily economists this appealing to authority is also unhelpful.

        Look. There is a ton of history in the last centuries. There is a ton of data today. There are other countries beside the great U.S.A. (which is/was a nice country, but *shocking* not the greatest nation on earth). There is a ton to learn from evidence instead of ideology. One of that data points was the Great Depression which catapulted the limited governement republicans for decades into obscurity and the New Deal democrats into power.

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      • youniquelikeme says:

        The founding fathers would just shoot each other in debate. Now they Politicians shoot each other in the foot and act like children.

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      • Bradley C. says:

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      • JCJ says:

        Rather than idealize the situation, Let’s look at some facts compared to the Reagan era.

        The average CEO made 40x the average citizen

        The average % of taxes paid by corporations was 30

        Today, the average CEO is making making 400 x the average citizen

        Corporations are paying less than 6.5% of the nations taxes.

        The middle class has shrunk

        Big corp executives like Exxon, BP, Aetna, Citibank, Goldman Sachs, Merck, Walmart, etc.
        Did not make their high salaries from hiring anyone, but rather systematically ripping of the public.

        Taxes are a function of what we make. They have been low for years. But not healthcare, fuel, or so many other consumable goods.

        In America we can all bad mouth the govt. It is our 1st amendment right. But if you are someone big, and badmouth a given Corp or industry, watch out for Ninja lawyers.

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  5. Melissa says:

    You might notice that investors in the bond market have all bonds available to them to consider. The fact that corporate bonds (those judged based on those “business books” you think are so sound) have to pay a higher interest rate than the T-bills suggest that people who put their money where their mouths are do in fact judge that it’s the businesses that are “ouch” investments compared with investing in the US govt.

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    • caleb b says:

      @Melissa

      The float of Treasuries dwarfs everything else.

      “The fact that corporate bonds.. pay a higher interest rate than T-bills…” – liquidity premium. It costs more to trade corporates, so they demand a higher yield. Walmart and the US are not going to fail in the next 3 months. But I can quickly trade out of a 3mo T-bill much easier than Walmart, so I’m willing accept a lower yield for WMT.

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  6. William says:

    Could you please define “reasonably”. No offense, but I would rather not just take your word for it. Also, have you ever investigated the data after tax cuts in terms of tax revenue? Look at Kennedy, Reagen, and others, and then make fun of Laffer. You come off in this like an MSNBC pundit-no facts, no data, just opinions (incorrect in my opinion).

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  7. Joshua Northey says:

    Infrastructure Spending good. The US could use some upgraded infrastructure (as opposed to say, more housing).

    Unemployment extensions bad. This will just exacerbate unemployment. Unemployment insurance beyond a few weeks just facilitates further unemployment. Is it even unemployment insurance at this point or is it just the rebirth of welfare? The best way to get people employed is to let them start starving. They wage demands become less sticky.

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    • Bradley C. says:

      I’m still leery of infrastructure spending for the sake of spending. What has/is being done with the billions of federal gas tax money we’re already sending to Washington? I don’t think there needs to be some great plan to all of a sudden spend even more on infrastructure. How about we refocus the dollars already there into projects that are (actually) needed that will spur job growth.

      Also, why infrastructure? Yes, some of it needs work and our federal gas tax money should take care of that but we shouldn’t (IMO of course) get too excited about creating a infrastructure construction employment bubble only to have it burst when this new pile of cash runs dry. It just moves the inevitable pain of finding a different job in something more stable, or worse yet attracting new workers to the bubble, and moving it on down the line for someone else to deal with later.

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      • youniquelikeme says:

        Be leery of porkbarreling sure, but leery of an infrastructure construction employment bubble? Be more afraid that your water might be contaminated, your utilities cut off due to overload, you will take twice as long to get to work as the roads aren’t widened, but population increases … that is if the overhead railway bridge doesn’t collaps on you first. There are always repairs, construction and upgrades to do and most of it is long overdue. A crumbling America says you are dead wrong.

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      • Bradley C. says:

        My argument was not for a lack of infrastructure spending but rather to all of sudden seem concerned about it when it’s been an issue all along. Don’t spend a big plug of cash that we don’t have in the first place on it but rather reallocate funds from proven failure’s like mass-transit and bike paths. Which, IMO, our federal gas tax dollars should not be subsidizing in the first place.

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    • Impossibly Stupid says:

      Why fault the unemployed if the jobs just aren’t there? While I’m sure there are people who want nothing more than to leech off the system, all the people I know who are unemployed *want* to work. It’s not that they’re turning down job offers left and right to collect welfare, it’s just that nobody is offering decent jobs.

      From that perspective, it is easy to see why this isn’t a well-structured plan. It would be trivially easy to “explain a vote against this”. Unfortunately, a plan that *would* work is also one that Republicans would not vote for. Things have gotten crazy partisan, leading the country to only circle the drain faster.

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      • Joshua Northey says:

        Granted this is just an anecdote and my experience, but in my experience with anyone who has collected unemployed (which is maybe a dozen people including myself once) they don’t RALLY start looking for a job until the unemployment runs out.

        Sure they look some, maybe an hour or two a day in a good case scenario (there was just a post on here a couple weeks ago that showed that job search was like 1 hour a week among the unemployed). But they keep their standards high and their wage demands high. Maybe they apply to 1 or 2 jobs a week. They complain about how their are no jobs and how they have bad luck.

        Then the unemployment runs out. Suddenly they are applying to 8 10 jobs a day, because now they actually need money. Not sort of need money theoretically, but are going to be evicted need money. And what do you know they find a job almost immediately.

        I have sen this scenario play out several times, and I have also known a few people who intentionally game the unemployment system to work as little as possible (I don’t associate with them anymore).

        I think with 6 weeks of unemployment you would get 95% of the effect of 99 weeks of unemployment with only 6% of the cost.

        Just my opinion based on my experience with it, but it also comports with what science knows about human nature.

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      • Bradley C. says:

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      • Jeff says:

        I lost a job at the end of January 2004. I had plenty of unemployment coming in. I had a new job lined up by the end of February.

        The plural of anecdote is not data.

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      • Bradley C. says:

        Touche. You are to be commended.

        But throwing money at a problem does not equate to fixing it. Especially when said money has to come at the point of a gun from somewhere (someone to be sure) else.

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      • caleb b says:

        Agreed, but it could be a good indication. See Malcolm Gladwell’s “Blink.”

        My buddies who went on unemployment did the same thing. They drank and partied until the money ran out. Then they went out and got a job. It’s not everyone, but it’s not just a few people either.

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      • davboz says:

        “The plural of anecdote is not data.” ———————
        Exactly. Just as your anecdote discounts absolutely nothing Joshua said.

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      • Impossibly Stupid says:

        That makes no sense. I just went to look up what unemployment payments are for my state: 50% of your wages. Do you honestly expect me to believe that if there *were* jobs paying 100% (plus medical and other benefits), people would *choose* to struggle to make ends meet?

        I’m a consultant (Yay, I’m forced pay into unemployment but will never receive a payment!), and that pretty much means I’m always looking for the next job. In my experience, with modern technology it *doesn’t* take much time to do a job search. Especially when there are no real jobs available! It’s a click of a button and a look at the results; if nobody is hiring for what I do this week, there is little more that can be done. I spend the bulk of my non-productive time following up on what are 95% dead ends; a lot of talk, but nobody is willing to pay to get real work done.

        Neither do job listings and applications amount to much. There are a lot of “fake” ads by companies and recruiters. The truth is that there is very little cost in screwing around with the system that way, yet you blame the unemployed for not falling into that time sink? Again, if there *really* were a lot jobs paying more than 50%, the people *would* have gotten them in their early application to the 1 or 2 best listings. But the jobs really aren’t there.

        Don’t blame the people who *would* work if they had the opportunity. Perhaps the whole unemployment system should be scrapped in favor of a real jobs system. I have long thought that one of the reasons that the economy is tanking is because the way we have computerized job listings is completely *backwards* from what would sensibly get people working. My state *requires* a two week course in doing job searches before they’ll even talk to you as a person about actually doing work on a real job! So, again, don’t fault the unemployed when they want to work, but there are roadblocks like that which keep them from being immediately productive.

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      • Joshua Northey says:

        “I just went to look up what unemployment payments are for my state: 50% of your wages.”

        In my state it is 2/3s of what you made on average over the last 5 quarters.

        “Do you honestly expect me to believe that if there *were* jobs paying 100% (plus medical and other benefits), people would *choose* to struggle to make ends meet?”

        A) Absolutely I do, because I have seen people do it. Most people can get by temporarily on 50% or 60% pay, and not having a job is nice.
        B) Half the point of my post is that to get a job they are not going to be taking a position making 100% what they were making, but one for less. You know…the “sticky wages” problem. People can be reticent to take a position for only 75% of their former pay because they rightly worry that they may be permanently locking themselves into that lower income level.

        “In my experience, with modern technology it *doesn’t* take much time to do a job search.”

        Then you haven’t had to try too hard. The last time I was really looking in my metro area I was going to maybe a dozen websites a day with a combined few hundred new postings each day. It would probably take me an hour just to navigate to them all and skim them. Now lets say I have narrowed it down to being mildly interested in a dozen, so then I need to take 20 minutes to really read and think about each one, and pick out some to actually apply to (which can easily take several hours to do right).

        “if nobody is hiring for what I do this week”

        A huge portion of what keeps people unemployed is them not being to re-evaluate/recreate “what I do”. This and inflexible wage demands are 80% of the problem. Companies are hiring. Hundreds of people will get jobs today in my metro area. Sure maybe you were a great real estate appraiser, but the world has way too many and truth be told you were probably just average anyway. Ace your interview with ATT and sell the new Iphone to suburbanites. Sure it sounds like a crap job but it actually pays a middle class wage.

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      • Colin says:

        We’ve been taught to believe Americans go hungry, the poor are destitute (and defined by an income line), etc etc. I have a buddy, college degree, working part time at a bar and grill. They have to hire someone full-time. They offer it to him. He has a decision to make. Must work 40 hr/wk for $13/hr plus tips or work 0 hr/wk for ~$1000 bucks a month. So he was “fired”, collected state unemployment, and moved to NYC after buying a ton of electronics and collectibles on ebay and then declaring bankruptcy. He shared a 1-room Manhattan apt and paid for it using another state’s unemployment benefits. Food is so ridiculously cheap that you’d be amazed how often the incentives align to NOT WORK. I bring this up because this is yet another unintended consequence of having a society that doesn’t punish irresponsibility and/or lack of productivity. It INCENTIVIZES IT! Young, talented, college degree, great people-person – declaring bankruptcy, choosing not to work – and getting by JUST FINE. (At the expense of the rest of us)

        It’s all anecdotal of course, but does anyone ever stop to think about the scale that weighs the number of “Will Smith Pursuit of Happiness” sob-stories (that everyone agrees there should be a safety net for) against people like my buddy? Can’t see the scale from the ivory towers.

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      • Robin says:

        @ Colin …um, is that job still available? I can move to wherever you are to take it. Neither of my jobs pay near that much. I work 35 hours a week for $800 a month and have a Bachelor’s degree.

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      • Clancy says:

        But what problem is cutting off UI supposed to solve? Do you really think that unemployment has doubled because people have suddenly decided to become lazy? Which really seems more likely: that there are millions of jobs available if only people were looking harder, or that there are a lot fewer jobs available than people looking for them?
        The economy is down because of a general lack of demand. UI helps create a little demand beacause people on UI are very likely to spend that money as they are probably liquidity constrained, i.e. they have things they need to buy and are not able to save the money.

        The idea that lower wages across the board will increase employment is also silly. This only makes sense in comparitive terms: Lower wages for maids will allow people to hire more maids, lower wages in Texas will allow Texas to steal jobs from NY. But what happens when everyone’s wages are lower? At best deflation happens and all the horrible things that go with it, everyone’s income drops, therefore everyones spending drops, business income drops, layoffs happen, employment drops, and so on into the death spiral.

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      • Joshua Northey says:

        If you cut off unemployment people will work for less, will be more willing to relocate, and will be more willing to change professions. That is what it will accomplish, helping people get on with their lives and provide them with motivation.

        As for you comments about lower wages not fixing anything, that is just naive…If people will work for less labor becomes more efficient compare to other investments. Maybe now instead of getting an auto-nailer I just hire two more construction workers, instead of driving my staff harder I finally replace the admin we laid off. Pretending lower wages won’t increase employment is just silly.

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      • Bradley C. says:

        Hidden due to low comment rating. Click here to see.

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      • Clancy says:

        Note again my first sentences. Where will people relocate to? What professions are experiencing an enormous labor shortage that could absorb millions of unemployed? Cutting off someone’s income in a jobs market like this one is not helping them any more than poking homeless people with sharp sticks is helping them find a home.

        To your second point: If hiring becomes more cost effective relative to other investment, that means a loss of productivity and another hit to aggregate demand and/or a drop in investment. This will be at best a wash. In your example: the company making power nailers will take a hit.

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      • Joshua Northey says:

        I thought we were trying to fix unemployment not aggregate demand? They are not the same thing.

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      • amlistening says:

        Please be careful of stereotyping ‘”the unemployed.’”

        I’m a college educated professional whose job was eliminated 2 months ago. I’m 53, collecting $207/week UI, and working with my state employment security agency to find a new job.

        At a class on resume writing we were told there are 100 applicants for each job opening.

        At a class on interviewing techniques we were told that many employers assume that applicants over 40 lack up-to-date computer (and other) skills.

        And on, and on…

        Beyond psychological aspects such as low self-esteem resulting from multiple rejections, barriers to employment are real and have many components.

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      • tim d says:

        ” they don’t R[e]ALLY start looking for a job until the unemployment runs out.”

        There may be folks like that, but the truth is, unemployement wages are still somewhat low compared to a real salary and, at least for me, that was plenty of reason to look for a real job in a real hurry. You can’t sustain a mortgage on unemployment. Car insurance. etc.

        Sure , different folks take different levels of risk to make them panic…but for me, getting those tiny unemployment checks was enough to make me really worried.

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  8. Mark Wolfrey says:

    Don’t forget how unreasonable that Obama’s spending proposal is.

    • It is approximately 20% of the first two “Stimulus” acts that had little to no effect on the Economy and Unemployment.
    • It is Front loaded spending and paid for more than 10 years in the future, exacerbating the National debt.
    • Continuing to pay people to not work, will not help get people up and working again.
    • Shovel Ready Jobs is a Punch Obama used last time and even laughs at himself.
    • Companies wont make long term investments in expanding the firm for a tiny percentage change in payroll tax, this was tried last year, and it has shown no results.
    • Companies are not going to hire long term unemployed for a pittance of a Tax credit that is temporary.

    These short term Gimmicky “Do as I Say Tax Policies” have never worked, here, or in any country they have been tried. Companies budget 3, 5, 7 and 10 years out. One and 2 year gimmicks, that are known to be temporary are treated in the budgeting process as such and generally ignored or abused to the extent the company can make some quick money without actually comply with the spirit of the law. This is what has happened in the past, and what will happen in the future.

    Only an Unreasonable man would consider this a “Reasonable” spending proposal.

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