Here's a story about conservative Sens. Jim Bunning's and Jon Kyl's complaints that unemployment insurance is hurting the labor market. (Each senator has a salary of $174,000 a year; their respective net worths are $607,500 and $580,151.) The piece does a good job explaining why they're wrong: The main problem with the labor market is the lack of jobs -- there is one job open for every six people unemployed -- not the misguided idea that people prefer receiving unemployment checks to working, which is the senators' concern.
These guys have obviously not spoken with anyone who actually lives on unemployment, which does not really cut the mustard income-wise. This is true especially for families: The two examples in the piece, families with four and six children, receive $1,200 and $1,650 a month. Bunning and Kyl also don't seem to know that people who qualify for unemployment insurance have also paid into the system for their benefits; even if they recoup more than they paid in while employed, it's obviously not a welfare program.
The other, macroeconomic, point, is that cutting off people on unemployment isn't going to result in their deciding that they can suddenly create their own jobs out of the air. It's going to mean a drop in consumer spending and a commensurate fall in employment and GDP, not the kind of economic confidence building and investment needed to pull out of the recession. While the extensions of unemployment insurance during the current recession has been unusually long, that's because this is an unusually severe recession -- see the above graph from Calculated Risk -- unlike anything seen in most people's lifetimes. Perhaps that's the most charitable excuse for these out-of-touch senators.
-- Tim Fernholz
