Sunday, February 3, 2008

MJS calls for extending unemployment benefits!

On Saturday, the Milwaukee Journal Sentinel’s editors wrote that the $146 billion fiscal stimulus passed by the House of Representatives should be amended to “expand aid for food stamps, heating assistance or unemployment compensation…”

They are right that these increases should be included in any stimulus package designed to jump start the failing economy and assist those most in need.

But the paper’s Business section article on the unemployment report completely undermined the editorial’s policy proposal by suggesting people are losing their jobs because they lack “versatility,” “perseverance, and a commitment to “hard work.”

Strangely entitled “jobs for the diligent” the article explains the devastating impact of unemployment by focusing on someone who quit his job to pursue an entrepreneurial dream more than a year ago-before unemployment began to rise. His situation is very different than the millions nationally who are losing their jobs because the economy has slowed. The former voluntarily terminated his employment, is ineligible for unemployment benefits even if they are extended, and is currently working. The later are involuntarily unemployed.

During cyclical downturns firms reduce production and cut their operational costs. One of the easiest and quickest to way to accomplish cost reductions is to furlough labor. Hence, the increase in unemployment.

The article liberally quotes a retired healthcare executive who says: “…businesses are suffering too...”and they need “’versatile employees who can stick around and contribute to profitability….”

The problem is you can’t stick around and contribute to profitability when you’re given a pink slip.

Workers are getting laid off because the housing bubble burst, credit’s tight, consumption’s down and the economy is contracting, not because they lack versatility or a work ethic!

Last month the nation lost jobs for the first time in five years- 17,000 in total. The month before the unemployment rate rose significantly. Over the past three months only 42,000 jobs were created per month, far less than the 150,000 needed to absorb new labor market entrants.

The number of people who have been unemployed for more than six months is now 1.38 million. Long term unemployment has not been this high since the 2001 recession when Congress last extended unemployment benefits.

Most economists recognize that the official unemployment rate significantly undercounts the number of unemployed by failing to recognize those who have dropped out of the labor market, discouraged workers, and the involuntary part-time.

Milwaukee with the fourth highest unemployment rate in the nation has a serious and growing unemployment problem.

Hard working, diligent people are losing their jobs through no fault of their own. The ranks of the long term unemployed are growing. The MJS editorial board is right-Congress needs to add extended unemployment benefits to its stimulus package.


Jack Lohman said...

Rather than simply extending unemployment benefits, which has been demonstrated to filter cash back into the economy, I'd like to see requiring those unemployed to spend part of their free hours doing needed community services, like working in non-profit hospitals and nursing homes, even sweeping streets if necessary.

I don't like the "free lunch" approach and do believe this can help retrain people for useful employment. It worked for FDR.

Michael Rosen said...


You are absolutely correct that the nation needs a catalytic jobs program similar to the Civilian Conservation Corps (CCC) or Work Projects Administration (WPA). These federal programs put millions of the unemployed to work during the Great Depression and help revitalized the collapsed economy.

Milwaukee’s black male unemployment in 2006 was over 46%. Even among prime age working males it was 33%. These are higher than the national unemployment rate during the Great Depression and demand action.

If we are to address the scandalously high rates of black unemployment in Milwaukee, Detroit, Pittsburg and other cities, we need a catalytic program. You are correct that such a program would also help stimulate the faltering economy.

But there is not sufficient political support for an urban Marshall Plan at this time. In Milwaukee, it has been difficult to get local elected officials to support community benefits initiatives.

There is, however, a national bipartisan recognition that the long term unemployed need some immediate support. Extending unemployment compensation benefits would would provide this help.

Extending unemployment compensation benefits, as the CBO points out, is also among the most effective stimuli the federal government can enact.

We need both. I don’t see what practical or political benefit is gained by suggesting one is exclusive of the other.

Jo Egelhoff, said...

Hi Michael:
I included your commentary in FoxPolitics News ( today. Good piece - thanks! I also linked to my commentary from a week ago that disagreed...