New economic realities call for a new national jobs strategy.
Even if it weren’t the day after Christmas, one word would spring to mind to describe the congressional Republicans who are unwilling to extend unemployment insurance benefits beyond 26 weeks to 1.3 million unlucky Americans. They’re Scrooges.
By that, we mean that they seem devoted to notions about the economy and government’s role in it that were common in the 19th century — but already then were being rendered obsolete by the Industrial Age, and were the subject of derision by the likes of Charles Dickens in his famous 1843 novella “A Christmas Carol.”
Today’s Republicans in Congress appear to believe that the U.S. economy will reliably provide a self-sustaining livelihood for anyone willing to work. Unemployment benefits will invite idleness, they claim. It’s a version of the “moral hazard” argument used in Minnesota in the 1870s to deny government aid to starving victims of grasshopper plagues.
The flaw in that thinking was already evident 80 years ago when Franklin Roosevelt’s New Deal came to Washington at the depths of the Great Depression. In most years since then, both major U.S. political parties understood that the nation benefits when government cushions workers against capitalism’s harshest blows.
That bipartisan consensus is unraveling. Prominent Republicans including U.S. Sen. Rand Paul of Kentucky have said in recent weeks that extending unemployment benefits prolongs joblessness. “When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,” Paul argued in a Fox News interview on Dec. 8.
Does Paul think the unemployed will look better to would-be employers when they’ve lost their homes or after they’ve become dependent on food stamps? That’s the fate that may well await some of the 1.3 million who stand to lose unemployment benefits when the new year arrives next week, and the 3.6 million more who appear headed for the same status in 2014, according to the Council of Economic Advisers and the Department of Labor.
Economists have found no evidence that receiving unemployment benefits keeps people out of work longer. Instead, a recent study by the Federal Reserve Bank of San Francisco found that the chief effect of extending unemployment benefits is “a reduction in labor force exits, rather than a reduction in job finding.” That stands to reason. One condition of receiving unemployment benefits is that recipients actively search for new employment.
The U.S. unemployment rate was measured at 7.0 percent in November. That’s twice as high as it was at the expiration of previous federal unemployment benefits extensions. Returning to a 26-week benefits limit might make that rate fall a bit initially, as more discouraged workers stop seeking employment. But the loss in job seekers’ incomes will take a measurable toll on the economy in short order. Some 240,000 jobs could be lost in 2014 as a result, the Council of Economic Advisers says.
The Democratic-controlled U.S. Senate and President Obama have not given up efforts to extend unemployment benefits. Senate Majority Leader Harry Reid put a bill with that aim at the top of his agenda for action in January. Advocates for the unemployed say resistance might soften in the U.S. House, particularly in light of the latest poll results in key districts (see accompanying text). Scrooge, after all, eventually came around — without the intercession of opinion polls.
But what’s really needed in 2014 is congressional recognition that the economy has changed in ways that are combining to leave too many Americans behind. The increase in income inequality in the Great Recession’s wake is personally painful to millions of Americans and distressing to millions more. The nation rightfully looks to its political leaders to prop open doors of opportunity that otherwise appear to be closing for average Americans. A new strategy is needed in education, infrastructure and tax policy to fuel job growth.
Ideally, Republicans and Democrats in Washington would collaborate to combine the best of both parties’ ideas. We know how far-fetched that sounds. But there’s no better time than the day after Christmas to wish for miracles.
The Opinion section is produced by the Editorial Department to foster discussion about key issues. The Editorial Board represents the institutional voice of the Star Tribune and operates independently of the newsroom.