The job picture has improved some in recent months. While current statistics overstate the employment rate by understating the number of available workers, it is true that things have gotten a little better. Hopefully we’ll finally have a recovery from the recession, one that is long overdue.
Needless to say, the Obama administration—like any other—is claiming responsibility for anything good that might be happening. But have the President’s policies actually promoted job growth? While there are always many factors to be considered, the lion’s share of the recent gains can be attributed to the long-term unemployment benefits supported by the President, most Democrats, and some Republicans in Congress. Unfortunately for the left, it was the expiration of damaging government intervention that actually helped get things moving.
In a recently posted working paper sponsored by the non-partisan National Bureau of Economic Research, economist Marcus Hagedorn and two colleagues concluded that 61% of the jobs created in 2014 can be attributed to the expiration of long-term unemployment benefits (see www.nber.org/papers/w20884). The technical aspects of this study are beyond they scope of this post, but another finding is also worth noting. States where unemployed workers received the highest long-term benefits experienced (on average) higher unemployment rates than did states with lower long-term benefits prior to the reform that eliminated these benefits. But after the reform, these same states experienced greater employment growth. In other words, long-term federal unemployment benefits hampered job growth through 2013, but their expiration helped promote it in 2014.
You may recall the arguments when federal unemployment benefits were extended on several occasions. Some on the right—those not afraid of being called heartless—suggested ending the long-term benefits because they provided an incentive for many would-be workers to stay unemployed. Those on the left argued that such a move would have been both insensitive and cruel because there simply were not enough available jobs.
The President continues to attribute any positive movement in the economy to his policies, but the Hagedorn study suggests otherwise. As the numbers tell us, it was the end one of Obama’s policies that seemed to trigger the majority of last year’s job growth. Just imagine what would have happened if the feds had stayed out of the long-term unemployment benefit situation in the first place.
The research paper sited is exactly right. I have a friend who lost his job and “enjoyed” pretty decent unemployment pay for 6 months. During this time he was very nonchalant about finding a job (he thought he had benefits for a year). During these 6 months, I don’t know if he even sent out one resume. At the 5 month, 3 week point he realized his benefit time was up and within 3 weeks landed a higher paying job that he had previously. It’s all about incentives. The government continues to give incentives not to work while hampering the private sector with regulations and rules. Our own government will be the death of our country.
the sequester was supposed to destroy the economy but it helped with the recovery. now Obama’s new budget wants to undo the sequester.
DITTO Velvet Hammer. It’s all about incentives. If the government wants to protect everyone from failure, it must rob from the risktakers to do it.