Expect More Employed People Soon

As part of the “stimulus” passed as a result of the great recession, unemployment benefits were extended to 99 weeks via the Federal government. Those extended benefits are now coming to an end (via the NYT):

Hundreds of thousands of out-of-work Americans are receiving their final unemployment checks sooner than they expected, even though Congress renewed extended benefits until the end of the year.

The checks are stopping for the people who have the most difficulty finding work: the long-term unemployed. More than five million people have been out of work for longer than half a year. Federal benefit extensions, which supplemented state funds for payments up to 99 weeks, were intended to tide over the unemployed until the job market improved.

One of the unintended consequences of such a policy is that the duration of unemployment tends to increase as benefits are extended. There is ample research to support this contention although it is still an emotional topic. For all of you who don’t think such a thing could be true of your fellow Americans, think about it this way. This doesn’t mean that everyone collecting unemployment benefits is a slacker coasting on the government dole. Someone recently laid off, with some savings (or assistance from family members savings) might continue to look for work in their preferred field for longer than otherwise if benefits weren’t extended. If the benefits aren’t extended and they can’t find a job in their field, they’ll be forced to take whatever they can find. So the duration of unemployment could obviously be extended for a time courtesy of extended benefits. Another example would be someone who continues to collect benefits while working in the cash economy. And yes, it happens.

So, now that these benefits are running out, what can we expect from the people who are losing the benefits? The Times article mentions one woman who recently exhausted her benefits:

Candace Falkner, 50, got her last unemployment check in mid-May, when extended benefits were curtailed in eight states. Since then she has applied for food stamps and begun a commission-only, door-to-door sales job. Since losing her job two years ago, Ms. Falkner said, she has earned a master’s degree in psychology and applied for work at numerous social service agencies as well as places like Walmart, but no offers came.

Ms. Falkner, who lives on the outskirts of Chicago, said she was grateful for the checks she received. But when they ended, she said, “They should have had some program in place to funnel those people back into the job market. Not to just leave them out there cold, saying, ‘The job market has improved, but there’s still 60,000 people in the city who can’t find one.’ ”

Ms. Falkner collected benefits for two years while going to school to earn a degree that has done nothing to improve her ability to land a job. Anyone want to bet on whether she took out government subsidized loans to get that worthless degree? After all that, she is now collecting food stamps and working a door to door sales job. Maybe her psychology degree will help her sell enough to get completely off government assistance. The point is that she’s working now as opposed to the last two years when she wasn’t forced to take a job because of the extended benefits she was collecting. There are a lot Candace Falkners out there and most of them will now be forced to take a job they don’t like. That’s sad I suppose, but at least they’ll be working. I would expect this to start showing up in the employment numbers fairly soon.

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