Rethinking 99 weeks of unemployment
blogs.law.harvard.edu
blogs.law.harvard.edu
I would guess the mortgage interest subsidy the government gives to Phil Greenspun for his house(s) rather significantly exceeds the payments made to anyone receiving unemployment insurance. Which of course is INSURANCE in the first place - the employee pays for it while working, and then receives it, when not working.
MIT receives something close to a billion dollars per year in government funding. Phil Greenspun is eating a lot more of that government cheese than anyone receiving unemployment insurance. But self-awareness is not a common trait among the libertarian programmer mindset.
So, everyone on unemployment should just take a MIT course to learn SQL for web apps. No problem, except it costs $50K to attend MIT. Hmmm. Well, you could just take one course. How much would it cost to take a three-day course with five skilled teachers ( http://philip.greenspun.com/teaching/rdbms-iap-2011 )? Maybe $2000? How many weeks of unemployment payments at $100-$400 per week would I have to save up to pay for that course? What precisely will I eat during those weeks?
There's quote attributed to Marie Antoinette where she advised the poor, lacking bread, to simply consume cake instead. The modern version is the Wall Street Journal's criticism of Lucky Duckies - those folks so "lucky" in their income levels that the government declines to tax said income directly (of course they pay more in taxes relative to their income than any millionaire, but that fact is conveniently omitted). Such statements display a total lack of knowledge - not only does Greenspun not know what he's talking about, but he doesn't know that he doesn't know.
http://gocomics.typepad.com/tomthedancingbugblog/2010/07/luc...
Still, why not encourage training for the unemployed? But if you don't pay 100% for it, the unemployed are in no position to take you up on it.
Self-motivation, training, a certain amount of luck - there are numerous factors to getting a good job. For some lazy slobs, it may be getting their welfare money reduced. But for others it may be getting a longer period of welfare and training so they can learn something new which allows them "to do what they love". I think it is not enough to talk about getting people into any kind of job, as if having a job, no matter what, is sufficient or necessary to justify their existence. We need to help people get into the right jobs, and those jobs need to be paid fair wages.
* Programming was(is) more fun than playing DAoC all day.
To wit: people are not going to be allowed to starve in any case (there is a floor to our society's capability of being coldly rational). Furthermore, becoming homeless imposes additional costs across the economy (simplest case: the direct expense of eviction, lost rent; more generally, deadweight loss to the whole economy). Finally, if a significant portion of those in the "welfare check" phase of unemployment will end up employed, but would not end up consistently employed without that cushion, society has to factor in the cost of additional long-term unemployed people.
See, I can play the "jam words in somebody's mouth" game too.
Out of curiosity, did you spend even a fraction of a second grappling with the hard questions raised by the post, or did you just jump straight to ad hominem? The question of whether we are burning immense wealth paying people to not work is a very important one.
I personally know two people who deliberately did not take jobs because they knew they could stay on unemployment, and I am not very social and don't really know all that many people to this degree. Is that really what this stuff is for? Maybe it's OK to grapple with that question just a wee bit, given that we're a few trillion in debt?
The plural of anecdote is not data. :) Furthermore, unemployment insurance is something people pay into in the first place. I imagine it's not setting the government back a heck of a lot more than, say, the Bush tax cuts.
And cutting off people's ability to pay for rent, food, and a car seems like a pretty poor way of getting out of a recession. The fact is that millions of jobs have been lost and they haven't come back.
I guess ~9% unemployment is the new normal, though— them's that got shall get, and those that don't deserve whatever happens to 'em because they're lazy. If they weren't lazy, they'd pull themselves up by their bootstraps, ???, profit!
I have to ask a serious question here: what's the endgame here? You cut off unemployment insurance. What happens to the people who suddenly have _no_ money? Is the answer "not my problem"? I can't imagine how Americans expect to "win the future" if their default reaction to an entire class of their countrymen reads like Ebenezer Scrooge.
I'm not claiming it is. The point is that it's not a theoretical concern. It only takes one instance to show existence, I was actually being generous and giving two.
"And cutting off people's ability to pay for rent, food, and a car seems like a pretty poor way of getting out of a recession."
Second order effects, second order effects, second order effects. You are making the common-sense assumption that if you cut people's benefits off, they will simply have less money, and not change their behavior at all. That's not how it works. Common sense is not just wrong, it is pathologically wrong when thinking about the economy.
"what's the endgame here?"
Total economic collapse if we don't stop spending so much money on destroying wealth, no matter how good it makes you feel to do it. This is only a particular case of the general trend. You are also assuming that leaving people without unemployment assistance is more or less the worse-case scenario, and so I'm leading them into the worst case. It's not. Leaving people with no economy in which to get a job and no economy with which to give them assistance of any kind, government or voluntary, is, and that is distressingly close to on the table. How will a collapsed United States dollar render unemployment assistance? You have to think about the full consequences, not just the consequences to one particular instance of the problem at one particular point in time.
I personally strongly believe with what I believe to be good reason that all of this soft-headed money spending and wealth destruction is far worse for everybody that tightening our belts and making people work for things, so I reject your attempt at moral authority. The problem of not having enough wealth for everybody can not be solved by policies that destroy yet more wealth and we are perilously close to a wealth-destruction death spiral here, if we're not already in one, all in the name of helping people while actually utterly burying them. It's your policies that lead to ruination, not mine.
So what happens, then, when they're evicted, can't make a car payment, and can't feed themselves? For starters, being evicted in a lot of cities is enough to make it _extremely_ difficult to find a new place. And libertarian pixie dust doesn't pay the rent.
I have to ask: have you ever _been_ on unemployment? I have. It's enough to keep you treading water. It's substantially less than the wages I had when I was employed. Do you imagine that people _enjoy_ barely making ends meet?
Now, I'm sure there are some people who can do it. Good for them. Recognize, however, that that's a privilege. They can afford to live with approximately half of whatever they were making before! They probably don't have a family, aging parents, or medical problems, nor any substantial debt.
"Total economic collapse if we don't stop spending so much money on destroying wealth, no matter how good it makes you feel to do it."
I don't even know what this means. I mean, I think I know what it's supposed to mean. If I consult my phrasebook, "destroying wealth" is usually code for "taxing the wealthy." The implicit assumption is that most rich folks earned their wealth rather than inherited it. I don't buy it. They were largely born on third base and concluded that they hit a triple.
I have no idea what this "soft-headed spending" refers to, either— if you're talking about the stimulus, well, I'm unsympathetic. If no one else is spending, the government can run at a deficit and mitigate the problem. Business was manifestly not stepping up. And personally I agree with Krugman, et al, that the stimulus wasn't big enough.
We're in agreement that belt-tightening is disastrous, but that is precisely what animates the author's sentiment. No matter how bad everyone wishes it to be so, the jobs are gone. Punishing those who had the misfortune to be caught in the blowback from Wall Street's epic failure seems misguided and counterproductive. Expecting folks who're already in the hole to pony up thousands of dollars to retrain themselves is the height of privileged thinking.
Bottom line: you won't "fix" unemployment by pretending the unemployed don't exist.
Look at the situation in isolation for a moment. Dollars go in to the unemployed house, a roughly equal number of dollars flow out, that all looks neutral. But that's just currency. Look at the flow of wealth. Food flows in and disappears. Housing is consumed. Wear and tear is put on possessions. Imagine if absolutely everybody in the economy is doing that, not because this is actually possible but because it shows the situation in stark colors. It doesn't matter how many dollars you pump into that economy, it can't work, the food and shelter and objects for possessions have to come from somewhere. That's the difference between "currency" and "wealth" in a nutshell. You can't fix the economy by shuffling money around and shutting down wealth production. (Nor is the government all that good at wealth production. How much mining does the government do? How much food does it grow? It's more complicated than that, but this is closer than most other ways of thinking about it.) So...
'If I consult my phrasebook, "destroying wealth" is usually code for "taxing the wealthy."'
No, not even close, when I say it. I actually mean real wealth is being consumed and not replaced, nothing to do with taxes. That's what actually matters, not little dollar symbols. An excessive obsession with the dollars while ignoring the wealth is arguably the main reason the government's response has been so inadequate. Taking money away from people generating wealth and shunting it into a wide variety of ineffective areas of the economy makes things worse, not better.
There's no way out of this entire problem, of which over-extended benefits is only one small part, without pain. You think you have a solution to easing the pain, and it does ease it locally, but your way generates more pain globally, and eventually that catches up to us. Like, the last couple of years and the ways things are going the next few years too. Again, I reject your attempt at moral authority. Your way leads to disaster, the one we're all but headed full bore for right now. That pain is necessary now is not because of my choices today, it is because of the choices already made. I'm not advocating pain, I'm announcing the fact it's already here. We've got a gangrenous limb and you're upset because I'm not willing to go along with the "keep pumping more anesthetic in and it's all fine because there's no pain" plan. Yeah, I'm not, but I don't think I'm the one with a morality problem when I suggest the gangrenous limb should be addressed sooner rather than later.
If only Greenspun had thought this through - then he might have suggested something like this:
for people who’ve been unemployed for 12 weeks, simply pay for a year of education in programs with proven records of skills-building (I guess you measure by how many finished and were able to get jobs)
I guess ad-hominem attacks are a lot easier than addressing Greenspun's simple economic question: "Is the 99-weeks-of-Xbox system that Congress created more sensible than it seems?"
I'm personally a proponent of imposing unpleasant conditions on unemployment insurance to reduce moral hazard and make minimally productive use of the unemployed. For example, we can build a physical (rather than virtual) border fence with mexico with labor costs close to zero - we do is select random able-bodied unemployed people and make working on the border fence a condition of receiving further benefits. (Or similar projects - for example, we can reduce the waiting time at the DMV to 0.)
Again: "I'm not endorsing Greenspun's plan, I'm just pointing out that the original poster didn't even bother to read Greenspun's blog post."
My belief is that most of the unemployed should accept lower wages, less pleasant jobs, and many should relocate. (Government assisted relocation was another one of Greenspun's suggestions, BTW.)
As for lowering wages, that's a good thing. Wage stickiness is a major contributor to recessions - this is one thing that Keynes, recalculationists, Austrians and ZMPists can all agree on. Downward wage pressure can help break the back of wage stickiness.
1) Preserving high wages by stifling the availability of workers and then charging a higher tax on the employed to pay unemployment benefits.
And,
2) Letting there be more competition for available jobs, forcing wages down, but employing more people.
There isn't really a controversy about whether unemployment benefits incentivize unemployment. They clearly do. In the absence of beneits, people would very rapidly find ways of obtaining income. The point of unemployment benefits is to allow them to find better income streams; ie, not by selling blood. If all unemployment benefits do is delay the inevitable trip to the blood bank, they are indeed a poor idea.
How does unpaid ditch digging help unemployed find employment?
What is the effect of unpaid ditch diggers on employed earthmovers/DMV workers?
What happens if the unemployed are laid-off earthmovers/DMV workers?
This is just another conservative/libnerdtarian [sic] anti-social rant against lower-class people. Ditch-digging doesn't work, neither does job training. If the government doesn't want to interfere in job creation, the most viable alternative to prevent mass social unrest is to just give people money. The real waste comes from trying to spend it on ditch-digging and job training welfare programs.
Read Gordon Lafer's The Job Training Charade for the statistics, to understand what will happen to the US in the next 20 years, and for an answer to tptacek's original question (spoiler alert: such a program doesn't exist, because it's impossible).
If you're a conservative and steam starts coming out of your ears at the thought of the undeserving welfare queens getting your tax dollar hand-outs, think of it this way: they're going to have the freedom to spend it on whatever they want, no big government telling them what to do to keep their welfare check. Isn't that the essence of economic liberty?
"Moral hazard occurs when a party insulated from risk behaves differently than it would behave if it were fully exposed to the risk."
What is the behavior change of people if government provides money to the unemployed, and why is it bad?
If I have someone giving me money every week, that I can use to buy food, I might be less motivated to look for a job.
If you're reading this, chances are you're here because you've read Paul Graham's writing and want to be an entrepreneur. Paul Graham says that jobs are bad things (http://www.paulgraham.com/hiring.html) and you should be an entrepreneur instead.
The problem is that something like 90% of startups will fail. I bet there are more than a few people on HN who have worked on a startup while receiving unemployment benefits. So if you're on unemployment benefits and decide to do a startup under the table, there's at least some chance something good will happen.
The chance that nothing productive will come out of people working in the unemployment GULAG digging the Great Mexican Ditch (btw, wouldn't it be cheaper to hire Mexican laborers to dig it?) is 100%.
Of course, none of this applies to you, because you're a special entrepreneurial snowflake. No one you know or care about has ever, or will ever, be unemployed. But everyone else is supposed to be your wage slave, willing to move across the country to work on your social media startup, cleaning toilets for stock options (because, you know, janitorial services is a dead industry). Either that, or they're a welfare queen spending their days snowboarding and playing x-box while sipping champagne and smoking cigars rolled from your tax dollars.
And fuck their safety net and their medical care.
This is why I have no problem calling out "libnerdtarians" and other social conservatives. There's a surprising lack of self-awareness, empathy, and the ability to perceive things from other people's perspectives. Some people call it being a sociopath: http://addictinginfo.org/new/?page_id=342
They become employed as ditch diggers at a wage equal to unemployment benefits. The effect on employed earthmovers/DMV workers is that their wages will probably be lowered. Let me point out (again) that I'm not advocating job training, since I don't think it will work.
My theory is that the only way to improve our employment situation is to lower wages, relocate workers, and accept that technology has made some people obsolete.
libnerdtarian
Calling me a nerd, while correct, adds no value to this conversation. Of course, I wouldn't expect a stupid bleeding heart liberal to understand that. (Notice how pointless the last sentence is?)
So you're advocating government creation of low-wage, dead-end make-work jobs on projects that don't create any value, and the destruction of current job wages and benefits through artificial government-subsidized worker oversupply.
This is the GULAG, but I don't understand what the ideological benefit for the inmates is. Oh yeah, and the GULAG actually created a lot of value from gold mining and timber-cutting.
"My theory is that the only way to improve our employment situation is to lower wages, relocate workers, and accept that technology has made some people obsolete."
The market is already doing all of that, why do you need to get the government involved? I'm arguing that the employment situation does not need improvement. We should accept the productivity improvements of technological change, and use it to work less. People playing x-box on unemployment benefits is a good thing.
No, it isn't.
People playing x-box on unemployment benefits is a good thing.
No, it isn't.
Subsidising the high costs of aerospace engineering training and certification to add a few people to the back of that unemployment queue (behind the people with a decade's experience and two decades' aviation enthusiasm) doesn't sound like a better use of funds than buying X-boxes. Maybe the existing unemployed engineers should revitalise their resume with study at efficient modern universities like the University of Phoenix?
If I wanted to contract non-nerd programmers to cut costs, the ex-clerk with the six month boondoggle programming course isn't going to get a look-in ahead of the cheaper outsourcing company staffed by smart graduates motivated enough to endure a CompSci degree in the hope they might one day impress the boss enough to make manager.
If Greenspun had thought it through he probably wouldn't be implying a shortage of demand could readily be addressed by investing in increasing the oversupply of mediocre job candidates. Or, working at the high end of the state-subsidised education market, maybe he still would...
I'm all in favour of state sponsored training, but he couldn't have made a much worse case for it.
There is no longer a shortage of demand. Sales, consumption and production have more or less recovered to their pre-recession levels.
http://research.stlouisfed.org/fred2/series/INDPRO
http://research.stlouisfed.org/fred2/series/PCE
http://research.stlouisfed.org/fred2/series/RSAFS
http://research.stlouisfed.org/fred2/series/GDP
This would not have occurred if we had a shortage of demand. The only thing that hasn't recovered is employment - firms are meeting the same demand with fewer workers. This is why profits are up:
http://research.stlouisfed.org/fred2/series/CP
This also suggests that it will be very difficult to solve the unemployment problem - it appears that most of the laid off workers were completely dispensable (perhaps with some changes to business processes). If they provided little of value to their former employers, it will be hard to convince a new employer that they will provide value for him/her.
If growth of the economy overall is needed to solve problems of structural adjustment reducing labour market demand levels, I'm not sure that churning out more mediocre database programmers through subsidised courses can be presented as an optimal solution. As I said earlier, I'm not remotely opposed to govt-funded training when advocated in less crass terms than Greenspun's, but if implemented badly the end results can make employees even more dispensable by commoditising skillsets that were previously an edge for those investing in their own education and dissuading newly-profitable employers from investing in training in areas where demand is picking up.
I'm all for training and educating instead of just handing people money. Or as a condition of handing people money. Or just making it available to the unemployed at no cost.
But 99 weeks was an exception and AFAIK no-one is getting 99 weeks ever again. So bringing that into the discussion makes the whole thing seem like a disingenuous class war against the unemployment-is-spring-break strawman.
Frankly, I have a hard time believing that anyone who conflates 'unemployment' with party time has never been on unemployment or known anyone close who has. You don't make what you used to make on unemployment. You won't be paying your bills with it. You'll tap your savings, and those will dwindle away. You may well still lose your house. Your stress level is through the roof and your personal relationships will suffer as well.
I can understand people whose moral hackles get raised, when they hear of an unemployed person who partakes in leisure activities. But if you've ever been in the situation, or seen it up close, you know it's not at all what it looks like.
I think back to when I was out of school and the only real skill I had was "I'm good at learning things." I couldn't program very well and I didn't know much about databases. I had some connections and found a job and fixed those problems (mostly).
Unemployment sucks but there's no doubt many people aren't really using the time well.
> But if you've ever been in the situation, or seen it up close, you know it's not at all what it looks like.
I've personally known a guy on unemployment for over a year, able-bodied with a college degree. He snowboarded 5 days a week, but admitted that when his unemployment ran out he was probably going to have to start looking for a job. It really was "party time" for him, though I don't claim he was the norm. I'm just giving this anecdotal evidence to say that if we want to discuss the usefulness of long-term unemployment benefits, we're going to need hard data. Your descriptions of what unemployment is really like aren't any more convincing evidence than the OP's.
In my case, less then a year after graduation the agency I was working at lost our biggest client, I was the newest hire, and was in the first round of what ended up being a reduction of, no exaggeration 90% of the entire company so it could then be acquired. This was March 2009. I didn't have any real savings, and my parents couldn't bail me out. I qualified for the maximum which was about $316 per week after taxes.
So of course immediately I was looking for a job, and had an offer in hand by the end of April, but it was for a lower paying job, it was clearly a stop-gap job. I think many people my age, don't want stop-gaps, but when you don't have a support system you need to do what needs to be done. Of course I kept moving forward and looking to move up, made a move from DC to NY for better money, and continue advancing. But had I not taken the "stop-gap" I would've crashed and burned.
And so, the other folks I know who didn't take similar paths had one thing in common: they could count on their families or some financial support system. I don't begrudge that, I would do the same for my future heretofore unborn children, but it seems to me to be a common thread.
Feel free to look up any number of sociological and economic studies about what happens to people who are on unemployment. Suicide rises, separation rises (divorce itself tends not to, as divorce is expensive), domestic abuse rises, savings plummet, bankruptcy rises, foreclosure rises, future earnings drop.
The studies have shown that it looks nothing like party time in the aggregate. But somehow that doesn't stop people moralizing from a privileged vantage.
Edit: Frankly, it's just the same damn Welfare Queen argument all over again and I keep hoping that nonsense was long since disproved and buried, back with Trickle Down and the rest of Reagan's 'conservative' fiscal bonafides.
In fairness, neither is yours. My anecdotes regarding the unemployed match GP poster, not yours. For the unemployed young I've known, it is "party time." I do not claim that my anecdotal information is data on which to base policy decisions.
Nevertheless, your data point suggest we could characterize the "partying unemployed". I'd guess these people are mostly, young, middle class, don't have any family to feed, and can count on their parents to back them up if they really mess up. (Some of these factors are of course correlated by causation links.)
One particularly striking example is a fellow who works summers fighting fires for the forest service, and is "unemployed" the rest of the year. It's not a safety net or insurance in his case, it's planned (I'm unsure as to whether he's able to do this repeatedly, or only for the one year).
That's what I said. At least,that's what I meant to say.
Trying again: My post is not and was not meant to be 'evidence'. It's just a (somewhat exasperated) refusal to swallow Greenspun's characterization of 'unemployment==party time' without any support.
> "For the unemployed young I've known, it is "party time.""
And from the outside, many knowledge jobs can appear to be "party time" too. If I had a nickle for every time I heard someone characterize my job as "just sitting at a desk" or "surfing the internet all day", I could enjoy some party-time. The point being: if someone is going to cast aspersions from the outside, they should probably bring more than some selective reporting highlights and appeals to "what we all know".
Unless I'm grossly misinterpreting, you are constructing quite the straw man of the argument against long-term unemployment benefits. People who are skeptical aren't bothered because they think the unemployed are "too happy", they're bothered by the fact that the unemployed will have no direct incentive to find work. In fact, even the OP (who's post I think is stupid) doesn't characterize the unemployed as happy.
Most people out there don't find new jobs in two weeks. Your friend could have afforded party time during the benefits period - once this run out, how long was he living off previous savings or external support?
My friend was living off solely unemployment benefits for over a year.
From page 7 of this
http://www.edd.ca.gov/pdf_pub_ctr/de1275a.pdf
I believe that if you make $47k or more in the year leading up to your unemployment (technically, if you made more than $11.6k in the highest quarter of that year), your benefits are $450/week or $1900/month or $23,464/year. Raising a family of 4 on that would be challenging, but it's easily enough to live carefree in Santa Barbara, CA (where I lived, with one of the highest housing prices in the US) as a 26 year-old bachelor while paying $500 for a skiing season pass and several hundred dollars per year in mountain biking repair costs. (Both he and I were avid mountain bikers; trails are usually free, but the repairs weren't.)
I took home $1600/month as a grad student while saving money and frequenting cheap bars, so I know this is very easily lived on. Of Course, I didn't have quite as much free time for boarding and biking as he did.
The simplest way to determine whether unemployment induces people to consume leisure: measure whether changes in the duration of unemployment benefits affect the duration of unemployment. Do you know of any such measurements, or are you simply assuming that reality supports your views?
Edit: The classic paper on this topic is Meyer, but it's a bit old. http://docs.google.com/viewer?a=v&q=cache:xdATBYGtHBcJ:w...
This paper strongly supports the theory that unemployment benefits create moral hazard.
Here is a more recent paper showing the same thing in Europe, after a natural experiment: http://ftp.iza.org/dp2171.pdf
I'm sure you could reply with a study that supports your point of view. This thread would then get very boring, as few of us are qualified to vet the studies.
It is, however, not very compelling to argue the lack of empiricism in a comment thread on a Greenspun article that takes as a premise the idea that people are spending 99 months playing government-sponsored Xbox. Maybe not so much with the high horse with you, on this particular thread.
Actually, the second study I linked to (from iza.org) argues against that claim. I don't endorse that paper (not familiar with it), but you are welcome to take a look if you are actually curious about it. Of course, feel free to skip that step if empirics bore you.
Note that roc was the one who smugly appealed to empiricism, but provided none in his post: "The studies have shown that it looks nothing like party time in the aggregate."
Precisely 0 lines of his post provided empirical facts, but 2 lines (of 4) were devoted to attempts to lower the status of people who disagree with him: "moralizing from a privileged vantage...Welfare Queen...Trickle Down...Reagan's 'conservative'..."
I'm just pointing out that it [edit: attacking one's opponents] adds nothing of value to the conversation.
Greenspun's post speculates a bit about the ineffectiveness of our current scheme, suggests some alternatives, and asks the reader if his speculation is wrong.
I will defend theorizing - I think it's useful. If we can confirm or refute Greenspun's theory based on empirical evidence, that's even more useful. Roc isn't attempting to do anything other than lower the status of his opponents. That's [attacking one's opponent] not only useless, it's harmful.
Nothing prevented Greenspun from framing his argument in more neutral and objective terms. He could have said, "our scheme is ineffective because it induces people who don't have the skills for good jobs and like most Americans don't know how to effectively search for a job to waste many months of their lives fruitlessly". Instead, he played directly to the worst biases of his own choir of libertarians by evoking Xboxes.
And now here you are berating people for having the temerity to take issue with a recklessly constructed, poorly supported argument. And THAT'S FINE, I don't mind, but I'm definitely going to call you out for pretending to take the high road on this.
I'm berating roc for making an ad-hominem attack in lieu of an argument (see the emphasis I added to my prior post, which was apparently unclear). My normal practice is merely to downvote such comments - I only bother responding to them when they receive a lot of upvotes.
I think it's notable that people are more willing to give his careless characterization a pass, simply because it aligns with our moral sense that economic outcomes have some sort of parallel to our sense of justice. (economic losers must be social losers who deserved and/or inadvertently caused their unemployment/foreclosure/bankruptcy with bad planning/habits/use of time, etc.)
Speaking of Google: Moral Hazard has nothing to do with whether unemployment is party time. I agree that it exists and 99 weeks is far too long for a standard policy. I don't see how that has any bearing on my disagreement with the article.
Jessriedel did the same thing: "I don't claim he was the norm. I'm just giving this anecdotal evidence to say that...we...need hard data."
You asserted the existence of evidence without providing it (potentially misleading), and then attacked the people who disagreed with you (harmful). If you have your own theory, argue it and acknowledge uncertainty (just as Greenspun and Jessriedel did). If you have facts to support your position, present them (if you do, awesome). Ad hominem attacks provide no value.
I didn't (intend to) take issue with any part of jessriedel's post. Clearly I misspoke in my reply and people were confused. My intent was to concede his point: I was not providing evidence about what unemployment looks like. I provided nothing more than my own opinion. We all agree on that.
And I'm truly not interested in trying to solve political problems on the internet, so I invited him to sate his own curiosity as to what unemployment looks like. You're either interested in the issue and thus need to do your own research or you're not. If I'd used Google to scare up a link or two, that should not be sufficient for any critical and skeptical thinker.
Feel free to disagree with my characterization of unemployment all you like. I invite you to. But please note that you only disagree with me, because I didn't provide any more evidence than Greenspun did.
And then hopefully you'll take a moment to wonder why you're complaining about my lack of evidence, but not Greenspun's.
I can see your point...as long unemployment benefits are the current status-quo, and they are, that someone questioning this should carry the burden of proof. I can appreciate this line of thinking.
Another way of thinking about it....if there is a forceful, non-voluntary, ongoing transfer of money from one group of people to another group, should the recipients of the money, or their advocates, not have some obligation (on an ongoing basis), to justify the aggregate benefits to society of this wealth transfer? Can you appreciate this line of thinking, at all?
Don't confuse this with me suggesting the unemployed should be cut off and thrown out on the street. I'm simply trying to point out that it seems to offend some people if anyone merely suggests we have a discussion on the relative merits of various kinds of social welfare.
I'd also like to point out that I am of the opinion that in the aggregate, there might be A LOT more money going in the other direction, especially lately.
Bad evidence is nt the same thing as no evidence. Would you go back to a restaurant you'd never been to before if you got food poisoning the evening after eating there?
My original post was never intended to be taken as "evidence" and I absolutely agree that it isn't.
Totally agree. Being unemployed is not much fun, but it seems that there has always existed a myth, typically promulgated by the mainstream media, that being unemployed is somehow a luxurious lifestyle of endless leisure and procreation.
I think you mean REcreation here, but I guess it could go either way.
This chart of US contribution to household assets makes that point pretty clearly: http://motherjones.com/kevin-drum/2011/01/chart-day-financia...
There were no net withdrawals of US household assets in the 1981, 1991 or 2001 recessions. The current recession is different. Americans have withdrawn over $300 billion in savings to keep themselves afloat.
1) Supply of training is probably limited.
2) Not all of these folks need training. There are a lot of people who are older, but not of retirement age yet.
3) Just because those people are trained doesn't necessarily mean that there will be jobs for them. There is a flat out lack of work out there for people - people with college educations, even.
To elaborate on that last point, lots of people (most notably Paul Krugman) contend that the recession is fundamentally caused by a lack of demand. So keeping folks on unemployment, paying rent and playing XBox instead of homeless and dumpster diving helps to prop up a segment of the economy that would otherwise have to completely drop out.
Having said that, there has to be a better way - being unemployed is miserable, even if you're receiving unemployment checks and playing XBox with your free time. It just happens that unemployment benefits are easier to defend politically than government works programs of all kinds.
Passion is nice, but it's not all it's cracked up to be. People who are "just looking for a paycheck" tend to be very interested in staying employed and are highly motivated to learn. We all like to talk about the person who only wants a job so they can survive while looking for other work, but we ignore that many of them realize they won't get another job, and their best bet is to do well in whatever position they can find and move up.
I'll take a steady, reliable, hard worker over a "passionate" precious and unique snowflake any day.
To compound this, not only are we mechanizing jobs faster than before, but job mechanization tends to eat up the jobs that take the least training first. So not only are we losing jobs for people to do, but the jobs we have left require an increasing amount of training.
So, even if we come up with new doodads to buy, any of the human work that will go into making them will require an increasing amount of training.
I'll never understand the mindset behind pre-ripped jeans. What's next - underwear complete with skidmarks right off the rack?
And that's partially true. While freedom of access is an important step to a society of equals, if one thinks that's all that is needed to address education amongst the un-/under-employed, then one needs a better understanding of human psychology/sociology/education :P
RE: Krugman & Demand, i think that's the fundamental problem right now. We need to take things that currently have no monetary value, and build something that somebody is willing to pay for. If the consumer economy has collapsed and we can't rely upon individuals to buy your product or service, you gotta find a business that will, or you've gotta lower your price point and go for volume.
'Limited supply of training' is falling as well, with no small thanks to a series of projects like Arsdigita that have put knowledge online. Anyone who has internet access and isn't learning is being held back by personal culture issues.
There's lots of poor culture issues at work in this recession. For example, there's a population of homeowners who have paid for houses and now find the value them to be underwater. They don't want to realise the paper losses. This prevents them from moving for work.
As far as self teaching goes, well - that's a whole argument in itself. I'll just say that I don't believe that the haves in this country are all autodidacts, and the have nots aren't.
On another note, here's an interesting blog post from Greg Mankiw (another Harvard academic) on the economic rationale behind setting a time limit for unemployment insurance: http://gregmankiw.blogspot.com/2010/12/my-agnosticism-about-...
The basic gist of it is that there is an optimal time limit for unemployment insurance benefits, and that that time limit should probably increase during a weak economy to help reduce income uncertainty and prop up aggregate demand. The question is how did we end up with 99 weeks? Why not 199 weeks? Or 13 weeks?
Beyond the fact that roles & contributions that you have in your work place, this is still a difficult task, because it requires you to understand the organization you work within, not just the market/business.
And lets be honest, there is no perfect organization where tasks and opportunities come up, and the requirements flow smoothly into design, implementation and roll-out.
In short, people don't get what role they should play in the workforce, because nobody ever talks about participating in the workforce from an individual perspective. You have to cobble together knowledge from the domain of personal productivity/product management, being actively involved tracking the business you work in and the structure of your organization, and lastly be capable of measured critical review of your performance.
If you can do these things, congratulations, you are amongst the few. :P
Even the grads (and other job seekers) who are eager to learn expect to have a company invest in training them. Why would I invest in training you if you spent 6 months job searching without once doing something that actually made you a better candidate for the job?
Sure, if that's reality then it doesn't make much sense. But saying it's so doesn't make it so. The Cadillac driving welfare queen is a hyperbolic Reagan talking point.
But let's pretend for a second that nonsense is real and most of those on long term unemployment are spending most of their time playing Xbox - the suggestion is that instead of paying those people the marginally sustainable monthly pittance, we should pay to train them ... and then they pay rent/mortgage, purchase food, pay for children's needs, etc. with what, exactly?
Being unemployed sucks. It's a horrible situation. While there are, of course, some slackers out there, it's almost always involuntary. (As can be clearly seen from the job statistics out there: The reason we have 10% unemployment in the US right now is because there aren't enough jobs. Telling the unemployed to "just get a job" is as productive as telling a sick man to "just get better".)
If someone who can't find a job chooses to pass some of their time playing video games, who am I to complain? If it makes their life a bit better, then I'm all for it.
So how did I waste my time during my 83 weeks of unemployment? Mostly looked for work. I read and did a few exploratory things. I went on quite a few interviews as my resume is pretty good, but one look at me told the tale of my age. I coached a high school basketball team (and wrote a Java GUI for game stats and management). I did work around the house, repairs etc. I paid bills and figured out ways to stay afloat. Sorry, I don't have a gaming console. I exercised to try to stave off depression. I visited my failing parents weekly and took over their financial chores. I took up singing. (No one would pay me for that either.)
To be fair, Phil was probably not talking about me, but about younger workers like my son. He hasn't been in the work force and is not eligible for unemployment benefits. His generation is having a harder time than mine. Maybe he should study SQL at U of Poenix. He doesn't have a gaming console either.
About the high expectations, perhaps I do. I don't think that's so bad though. I hope you do too. A difficulty though is that so do prospective employers. They are often reluctant to offer lower pay to people that they feel might flee when times improve and they can find a better job.
There seems to be some deliberate dishonesty here. First of all, you're posting this on the Harvard blog, so this sounds like a group of undergrads from the Ivy League and top 20 schools. So this little anecdote has almost no relevance to those who have been on unemployment for over a year. The deliberate omission of where these students come from makes it difficult for me to take this article seriously, especially with the explicit assumption that only MIT students are nerds of a serious caliber, and furthermore that basic SQL is something difficult for non-nerds to pick up.
Furthermore, the article doesn't recognize that retraining and job-hunting are separate tasks, and not only are they difficult to do at the same time, but it's actually counterproductive.
Finally, the assumption that people are sitting around playing XBox with this money is slander. I doubt the author has spent more than 10 minutes in a social setting with anyone on unemployment. Unemployment checks in most cases probably won't even pay rent.
Not to mention that with lots of people from Tier 1 schools having a hard time finding jobs, it's not like the recession is a result of not enough people having college degrees. I mean, training never hurts, but the issue we're facing isn't a skills-to-opportunities mismatch, it's just a total lack of available jobs in all sectors.
Not to mention that with lots of people from Tier 1 schools having a hard time finding jobs, it's not like the recession is a result of not enough people having college degrees. I mean, training never hurts, but the issue we're facing isn't a skills-to-opportunities mismatch, it's just a total lack of available jobs in all sectors.
Additionally, I think there is a belief that to really move the needle we're going to need to really get business back to hiring. I don't think the deamnd in the job market is low end programming -- you can find tons of students graduating from Phoenix U and Devry for that. It's the "hit the ground running" expert talent. Someone who can come in and immediately start building iPhone and Android apps (even web talent seems to have much more supply than demand).
For some of these people 99 weeks may be sufficient to get them up to speed for such a task, but I do think it will be difficult. First they have to find good training, which in itself will be tough if they aren't web or tech savvy. I just don't think someone who can edit a picture is going to be hired in this market climate.
Giving money to people in unemployment is probably 90% of the way to giving money right to small business. Which in turn will pay their employees.
There seems to be very little reason not to do it except for the two psychological effects we alluded to earlier:
1) My paycheck is now lower by .2%... I'm going to spend less.
2) Unemployment isn't so bad. I can slack off, because I wouldn't mind a 99 week vacation. (or other similar sentiments).
I'm not sure either is happening in measurable numbers to offset the gain had by the extra money pumped into the economy.
Future taxes will likely pay for it in some form, but not current ones, which is one reason it has a stimulative effect. It's also what most economists recommend in many parts of the political spectrum (countercyclic fiscal policy).
But if you take that $100 from me and give it to an unemployed person, they are going to spend 100% of that, guaranteed.
Moreover, I'm not following you on the "less the sizable bureaucratic overhead" comment. You make it seem as if the gov't takes $100 from me, burns $10 in the White House Furnace, and gives $90 to the unemployed person.
On the contrary, every dollar of "bureaucratic overhead" is income for somebody -- a government contractor, supplier or employee. I've never understood why people act like the money the government spends just vanishes from the economy. Yes, a small, small fraction of it goes overseas. But it's so small it cannot be described as "sizable."
Nonsense. That's great that you'd save the $100, but even if you do that it still has economic utility, presuming you're putting it into a bank account. It then gets lent out to businesses or reinvested into the economy. The bank isn't sitting on a giant pile of money.
I thought banks were sitting on giant piles of money (thanks to the Fed), hence the low interest rates?
Short version: Money spent for unproductive reasons doesn't add to net wealth.
Or here's a better scheme. How good do you want the economy to be this year? GDP of $100 trillion? Great, I can make that happen. Have the government print a $100 trillion bill and give it to me. (Or hand-written is fine.) I'll use it to buy a $100 trillion candy bar from my friend over there, then he'll burn it. Boom, $100+ trillion GDP, zero inflation, recession over. We'll all buy yachts!
The point is that moving money around does not inherently create prosperity. It can help if the act causes resources to be used more efficiently, but figuring out how to do that is incredibly hard. Politicians (or anyone really) trying to do it at a national level are like monkeys at the controls of a nuclear reactor. They're vastly out of their collective league. Theoretically they could make the situation better, but don't count on it.
To be opposed to redistribution despite the obvious fact that it would create utility, one has to bring in additional concepts. For example, one might take some sort of ethical stand on redistribution being Pareto-inefficient. Or one might argue that the additional growth from inequality will eventually outweigh the disutility of respecting wealth inequality. (Either of these might not apply during depressed economic periods.)
1. Look at HN profile. See manky website listed there: lifeasparesh.co.cc.
2. That website doesn't load for me.
3. Go to Mr. Google and type in lifeasparesh.
4. Find blog.lifesasparesh.in.
5. Notice that in the search results the owner of this site reports a HN username of rick_2047.
Economic/political analysis may now continue based on this piece of information.
<detour>
(And yeah I'm receptive to ideas the original article. "99 weeks of xbox" is hyperbole but after pruning away the hyperbole from the article -- and the opposing comments in this thread -- there are some hard questions remaining. It's worth talking about these questions in an adult manner while attempting to avoiding Godwin-lite debate tactics. Which, I confess, I frequently find myself using because it's fun to go "Ha! Score!)
</detour>
You try call centers, but most of them won't take you if you haven't had a job in 6 months.
If you're lucky, eventually somebody takes a chance on you. Sometimes, that means that the labor supply has to tighten some.
Oh, and there's a perverse disincentive to start a business - if you do, you lose all of your benefits.
During the recession, a sequence of stimulus bills authorized temporary extensions for people who were nearing the benefits expiration (normally 26 weeks) and still hadn't found jobs, basically as a way of propping up demand. If a bunch of people lose their jobs at approximately the same time, and the economy stays weak such that many of them fail to find jobs within 26 weeks, then 26 weeks after the onset of the downturn there's a second downturn as a bunch of people lose a source of income. There are alternative ways to cushion that, like just handing out $n to everyone (or everyone below some level of income), but a temporary extension to unemployment benefits was the form of stimulus that managed to get political consensus.
There was never anyone at any time who had 99 weeks of guaranteed unemployment benefits, though. The only way you could've planned on that is if you lost your job near the beginning of the recession, and then correctly bet that Congress would pass a series of temporary benefits extensions.
On the other hand, I'd also agree with Zed Shaw about technology people being rockstars in any industry besides technology. Inside of 2 months I had better tools built for myself than anyone else had and it was a marked advantage. So it's possible it was just easy for me due to my background.
I'd be interested in reading about that.
A reader pointed me to this response to my Weblog article.
To answer Jellicle's question about "how much would it cost to take the three-day course?" ... $0. The course was free, open to the public (no unemployed people chose to attend), and all of the teachers volunteered their time over a three-day holiday weekend. We did use an MIT classroom and wireless network, but no capital equipment other than a video projector.
Let's look at the rest of Jellicle's assertions...
Wanker? Perhaps.
Libertarian? I voted for King Obama, though it might have been simply to make my December 2007 prediction come true... http://blogs.law.harvard.edu/philg/2007/12/12/election-2008-...
Rich? Since I don't work on Wall Street, by definition I am not rich. I have some money saved up, but the total is about what a successful hedge fund manager earns in a week.
Home mortgage subsidy? I've never had a mortgage. I worked from 1978 until 1996 as a programmer, saving money each year, until I could afford to buy a two-bedroom condo with cash. I certainly do not advocate a continued tax deduction for home mortgages. I think the events of the last decade should have proven the folly of the government subsidizing an oversized housing sector. Prior to the Collapse of 2008, I wrote http://blogs.law.harvard.edu/philg/2008/04/05/why-do-we-want... on the question of whether high housing prices are good for our economy overall.
Or you take a mid-thirties woman, out of work, who has developed a reasonable competency in some mid-level A/P job for a medium sized business. Put her through a language course and now you have a mid-thirties woman with a reasonable competency in German and mid-level accounting. Does that really make her more employable than she was before the training course?
Not saying that a WPA-style project instead of extending unemployment would be bad, just that there are a number of repercussions to it that would have to be considered.
In seriousness, I do think more people should consider programming as a vocation. It's good work if you can get it. Even our "crappy" jobs pay as much as the US median family income (seriously, look it up). But I don't think you can learn it in 3 days. It takes years, and not everyone is going to be good at it -- look at the people who are already programmers!
Those in industries that are contracting (manufacturing, pink-collar, STEM) probably have to move to find work. If one has a working spouse or school-age kids, this might be a no-win situation.
The partiers might be living solo and/or at home.
"Let them eat cake!"
I believe I posted a comment on his site to that effect in response to one of his earlier "cadillac driving welfare queen" missives, and it was quickly deleted (Mr. Greenspun is quite adept in deleting comments that do not agree with his sentiment).
I collected unemployment once, for a couple of weeks -- it was ~$200 per week, not even sufficient to cover the mortgage payment, let alone health insurance, food and utilities. It was shocking to me, as I remember my father experiencing bouts of unemployment back in the 1970s/1980s (tough times for steelworkers then, who saw their ranks dwindle), and he received ~$350 per week and we were able to meet living expenses (along with gracious helpings of government cheese).
Not sure training is the panacea -- put simply, as we become productive in the aggregate, it requires less workers. Corporate employment, even before the "great recession" has been trending downwards.
Sadly, nobody is addressing this structural realignment.
Happened to me a number of times. A major reason I unsubscribed - if I'm going to read economic and technological musings, I'd rather read something like _Marginal Revolution_ where the posters will give the same glib economist answers but will also consider how they fail.
"for people who live in states with an unemployment rate higher than average, offer a lump sum at the end of 12 weeks to assist the person in moving to a state with a lower-than-average rate"
This solution ignores several factors that make this a hideously bad idea in general. Factor 1 is that the unemployed person may be married and their spouse is still gainfully employed. So either he expects to trade one unemployed spouse for another after the move, or he expects the couple (and possible children) to split up for the sake of maintaining two households several states apart, just to expedite getting the unemployed person off the rolls. Factor 2 is that the unemployed person is undoubtably living somewhere and either has a rental lease or a mortgage. So I'm supposing he's going to break his lease, and thus screw over his landlord, or try and sell his house quickly in a down market, or if not, simply walk away, thus screwing his bank and possibly tens of thousands of equity that he's built up.
Instead, he should go find a bunch of middle-aged 99'ers, teach them his RDMS course and report back.
That's generally something best left to other sites.
Money paid to me by said insurance over 83 unemployed weeks $38,475.