Media reports on the Senate vote to renew long-term unemployment benefits established a false contrast between providing a safety net for unemployed Americans and policies designed to create jobs. In fact, experts note that unemployment benefits boost job creation and economic growth.
Senate Approves Long-Term Unemployment Insurance (UI)
NYT: Senate Voted To Continue Federal Jobless Benefits For Long-Term Unemployed. On April 7, The New York Times reported that the Senate had voted 59 to 38 to "retroactively restore benefits that were cut off in Late December and maintain them through the end of May. Officials say as many as 2.7 million jobless workers have been denied assistance since the law expired late last year." [New York Times, 4/7/14]
Media Falsely Contrast UI To Job Creation
WSJ Privileges False Jobless-Aid Vs. Job Creation Contrast Touted By GOP. On April 8, The Wall Street Journal privileged the Republican talking point that UI benefits stand in contrast to job creation by giving weight to House Speaker John Boehner's position without scrutiny:
House Speaker John Boehner (R., Ohio) has suggested that the GOP would be more likely to go along with restoring jobless aid if Democrats would wrap in a measure from Republicans that, among other things, would authorize construction of the Keystone XL pipeline, which environmentalists oppose but Republicans see as a source of new jobs for the unemployed.
"We are willing to look at extending emergency unemployment insurance as long as it includes provisions to help create more private-sector jobs -- but, last week, Senate Democratic leaders ruled out adding any jobs measures at all," a spokesman for Mr. Boehner said after the vote. Senate Democrats last week refused to allow a vote on the Republican amendment. [The Wall Street Journal , 4/8/14]
WaPo: GOP Leaders Do Not Want To Vote On UI Benefits "Unless It Includes Job-Creation Provisions." The Washington Post also did not question Republican's attempt to contrast unemployment benefits to job creation. On April 8, the Post reported:
Republican House leaders have repeatedly stated their opposition to the Senate bill, noting that they do not want to bring any unemployment legislation to the floor for a vote unless it includes job-creation provisions. [The Washington Post, 4/8/14]
AP: Republican Leaders Say No Evidence Shows The Bill "Would Help Create Private Sector Jobs." The Associated Press privileged the argument pushed by Republican leaders such as House Speaker John Boehner that unemployment insurance does not create jobs and pointed out that long-term unemployment is "above pre-recession levels":
Citing the letter, Boehner pronounced the Senate bill ''unworkable,'' and a blog posting by his aides quoted the Ohio Republican as saying there was ''no evidence that the bill being rammed through the Senate by (Majority) Leader (Harry) Reid'' would help create more private sector jobs.
The drive to renew the lapsed program comes as joblessness nationally is slowly receding, yet long-term unemployment is at or above pre-recession levels in much of the country. According to the Bureau of Labor Statistics, it accounts for an estimated one-third or more of all jobless individuals. [The Associated Press, 4/8/14]
Extending Unemployment Insurance Creates Jobs
CBO: Extending UI Benefits Will Increase Employment By Approximately 200,000 Jobs By End Of 2014. A report from the Congressional Budget Office (CBO) estimated that renewing unemployment insurance would increase "full-time-equivalent employment by 0.2 million in the fourth quarter of 2014":
Combining the positive effects on the economy from higher aggregate demand with the negative effects from job searches that would be (on average) less intense, CBO estimates that extending the current EUC program and other related expiring provisions until the end of 2014 would increase inflation-adjusted GDP by 0.2 percent and increase full-time-equivalent employment by 0.2 million in the fourth quarter of 2014. Those figures represent CBO's central estimates, which correspond to the assumption that key parameters of economic behavior (in particular, the extent to which higher federal spending boosts aggregate demand in the short term) equal the midpoints of the ranges that CBO uses. The full ranges that CBO uses for those parameters suggest that, in the fourth quarter of calendar year 2014, GDP could be increased very slightly or by as much as 0.3 percent, and employment could be increased very slightly or by as much as 0.3 million. [Congressional Budget Office, 12/3/13]
EPI: Unemployment Expiration Will Cost Economy 310,000 Jobs. A November 7 report by the Economic Policy Institute concluded that extending unemployment insurance benefits through 2014 would support up to 310,000 jobs, and that without an extension of the jobless benefit program those jobs would be lost. The report further concluded that the actual price of extending the benefit program for another year is much less than its line-item budget due to the effect it would have in boosting economic activity and decreasing dependence on other forms of government anti-poverty relief:
The actual net cost of continuing the UI benefit extensions is far less than the $25.2 billion "sticker price." The 310,000 jobs created or saved by the economic activity this spending generates will in turn generate greater federal revenues from the taxes paid on the wages earned by those who otherwise would not have jobs. They will also save the government money on safety net spending related to unemployment (for example, Medicaid and food stamps). In other words, when people have jobs, government revenues increase and government expenditures go down. [Economic Policy Institute, 11/7/13]
Extending Unemployment Benefits Is Good For Economic Growth
CBPP: Jobless Benefits Are Good For Economic Growth. The Center on Budget And Policy Priorities (CBPP) argues that extending jobless benefits is important to help a weak economy pointing out that these benefits will give needed help to jobless workers, and the labor market has not improved enough to end the program. The CBPP also notes that "unemployment insurance is one of the most cost-effective ways to help a weak economy" (emphasis added):
Jobless benefits go to people who need the assistance to make ends meet, they spend the funds quickly, and the spending ripples through the economy. In fact, without the consumer spending that those benefits generated, the Great Recession would have been even deeper and the recovery even slower. And while the recent Murray-Ryan budget deal provides a modest stimulative boost to the economy, the economic drag caused by lawmakers' failure to include an extension of federal emergency jobless benefits in the deal will likely negate the stimulus. It's also important to remember that because EUC ends when the economy improves, it has only a minor effect on long-term budget deficits and debt. [Center on Budget and Policy Priorities, 1/28/14]
Moody's Analytics' Mark Zandi: Each Dollar Spent On Unemployment Benefits Generates About $1.55 In Economic Activity. Bloomberg Businessweek highlighted a report from chief economist at Moody's Analytics, Mark Zandi, where he estimated that each dollar of "unemployment benefits generates about $1.55 about $1.55 in economic activity. By that measure, ending the payments would cost about $39 billion in spending next year":
According to the U.S. Department of Labor, extending federal benefits through 2014 would cost about $25 billion. The actual economic impact of cutting them off would be larger. That's because the unemployed reliably spend that money, creating a multiplier effect in the economy. [Bloomberg BusinessWeek, 12/12/13]
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