As Americans, we’re accustomed to a certain standard of living. Nothing lavish, mind you. Most of us don’t have big, fancy houses or expensive cars. Most of us don’t have investment portfolios bursting at the seams. But we do have families and we do have responsibilities, and given that we pay our fair share into the system, we expect a safety net when circumstances out of our control force us into the ranks of the unemployed.
However, in especially dire economic times…when the system fails us…it’s appropriate for that safety net to be extended until things pick back up. And, as you read the following, let’s remember why unemployment benefits were created in the first place: The Great Depression.
Why did the Great Depression happen? A systemic failure with the banks and no action taken to save them. Why did the depression continue? Because there were no jobs. And no jobs means no spending which means no economic recovery. And so starts a spiral that was impossible to get out of…until the US declared war on the Axis and we started deficit spending like crazy and sent everybody back to work.
Well, WWIII is not on the horizon so extending unemployment benefits is a pretty simple calculation. And yet…Republicans are starting to grumble about extending them?
But complaints that extending unemployment payments discourages job-seeking have begun to bubble into the political debate. Sen. Jim Bunning (R-Ky.) recently single-handedly held up the latest extension, a bill to keep unemployment benefits in place for 30 more days, saying Congress should find other cuts to cover its $10 billion price tag.
Sen. Jon Kyl (R-Ariz.) did not join Bunning’s effort, but he defended his colleague’s point of view. Kyl told the Senate he questioned why anyone would see unemployment benefits as helpful to the economy, or to the job market.
“If anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work,” Kyl said. “I am sure most of them would like work and probably have tried to seek it, but you can’t argue it is a job enhancer.”
Actually, Kyl is dead wrong about unemployment benefits not being a job enhancer. Sure, on its face it may seems like it’s not, but let me explain why it actually makes very sound economic sense.
The last thing you want a skilled laborer doing is trying to seek employment below his or her pay grade just to make ends meet. See, to stay an economic superpower, we want computer programmers working as computer programmers, not burger flippers. Why? Because not only does that mean no jobs for burger flippers, but the computer programmer may be missing an opportunity to find a job as a computer programmer and is therefore in a perpetual state of “underemployment.” And the rate of underemployment is always the more important number to look at when gauging the economic health of a country.
Right now unemployment sits at 9.7%, while underemployment sits at 16.8%. Now imagine that second number being 10% higher if we didn’t have unemployment benefits.
Buy hey, Kyl knows this. He’s just trying to get it paid for, right?
Well, tell you what…since the top 1% of income earners took billions out of the system with Bush’s tax cuts…how about we get them to give a little back? See, most of them (like Warren Buffet) are only paying 15% on their investment income…I think they can give up some of their tax cuts to make sure the rest of us don’t lose our homes, stop spending and we all fall deeper into recession…which will effect their investment income.
Sound like a deal?