Obama will host Americans who have lost their long-term unemployment benefits at the White House on Tuesday.
“When Congress first past this version of emergency unemployment compensation in 2008, and the president [George W Bush] signed the law, the unemployment rate was 5.6%, and the average duration of unemployment was 17.1 weeks. Today, the unemployment rate is 7%,” Perez said. “The average duration of unemployment is now 36 weeks.”
Betsey Stevenson, a member of the White House’s council of economic advisers, said that while the broad economic outlook was positive, the long-term unemployment rate – currently 2.6% – has remained enduringly high. “To put that in perspective, [during] average or normal times we’d expect to see an unemployment rate that was below 1%.”
The argument being that because long term unemployment is high therefore benefits should be extended.
However, there’s another, much less popular I have to admit, argument that the extension of long term benefits (in the US, benefits usually only last for 26 weeks, this has been extended in the current times) is, in some part, what causes a rise in the long term unemployment.
And the point about this argument is that it is true. The simplest proof being that traditionally long term US unemployment is that 1%, while long term unemployment over here, where we don’t have time limits on benefits, is more like 3 or 4 % (figures dimly remembered from a Richard Layard paper).
There have been more recent studies showing that the extension of unemployment benefits do indeed lengthen the period of unemployment in the US.
This doesn’t, of course, mean that if the extension is not granted then all of those long term unemployed will find jobs. Rather, it means that some of them will: and also that those who don’t will be entirely skint. Leaving a trade off: a trade off that you can decide either way. Do we be cruel to be kind to rescue some from the scrap heap of long term unemployment, at the cost of the destitution of some others?
Your choice really: but it’s undoubtedly true that the more the US has European style programs for the long term unemployed then the more US long term unemployment will look like European.