From my local news source, the AP announced:
This was announced at 06:58 AM this morning.
I sure do hope the economy continues to recover. I say this knowing that it will buoy an Obama election effort, however, it’s time for the uncertainly in the nation’s economy to shift to robust growth.
With that said, I am not sure this current recovery will be either long lived or robust.
Don’t think that incentives matter?
Don’t think that government programs that enlarge the nanny state don’t result in poor behavior?
Think again.
Posted in Idiots on Parade, Politics: International, Welfare
Tagged Entitlements, Incentives Matter, Unemployment
He’s tryin’.
The President is coming into the election against a head wind. Unemployment is high, his signature legislative win is unpopular, and getting more so, and he’s facing some stiff foreign relationship issues.
He’s up against it pretty tough. The relevant conversations of the day aren’t going his way. So, I don’t blame him for trying to change the national dialogue. For trying to pivot from issues he can’t manage well to issue that have proven to be traditional democrat strong suits.
I get the contraception pivot.
But it ain’t working.
Posted in Elections 2012
Tagged Barack Obama, Economy, Health Mandate, Iran, Israel, Unemployment
I’ve argued time and time again that incentives matter. And why people think this wouldn’t apply to the incentive not to work is beyond me. But now there is evidence of just how strong that incentive is: via Dan Mitchell
The extension of UI [unemployment insurance] is found to have a positive and significant impact on the national unemployment rate…. The UI benefit extensions that have occurred between the summer of 2008 and the end of 2010 are estimated to have had a cumulative effect of raising the unemployment rate by .77 to 1.54 percentage points.
That seems pretty significant to me.
Every year the Associated Press interviews top economists and asks them for their thoughts on the coming year. This year we have good news:
The three dozen private, corporate and academic economists expect the economy to grow 2.4 percent next year. In 2011, it likely grew less than 2 percent.
The year is ending on an upswing. The economy has generated at least 100,000 new jobs for five months in a row — the longest such streak since 2006.
The number of people applying for unemployment benefits has dropped to the lowest level since April 2008. The trend suggests that layoffs have all but stopped and hiring could pick up.
While a 2.4% growth rate isn’t as large as we would like to see, it does represent a better than 20% increase over last year’s numbers. As long as we continue to grow, every little bit helps. However, the employment picture doesn’t seem to look ay brighter for next year that for this year:
Unemployment will barely fall from the current 8.6 percent rate, though, by the time President Barack Obama runs for re-election in November, the economists say.
Not only has this economic crisis been deep but it’s been wide. We’re gonna be looking at elevated unemployment for years to come.
Last summer I posted that I expected unemployment numbers to improve in various states:
See, for a long time I’ve argued that one of the reasons we see extended unemployment is that we offer benefits for so long. We create the incentive to remain unemployed. Now, it may be true that the benefits are enough to keep the individual in home and food, but barely. However, it’s also true that the benefits encourage “under the table” wages. Either way, the incentive to work is gone. And when that incentive to NOT work is replaced with the incentive TO work, well, people will, in general, work.
So, to that end, I hereby predict that the following 6, actually 4 –25 is not very different from 26– states will see their employment/unemployment numbers improve:
Michigan, Missouri, and South Carolina cut their available weeks down to 20; Arkansas and Illinois cut down to 25; and Florida cut to between 12 and 23 weeks, depending on the state’s unemployment rate.
As of this month, this is where each stands:
That was then. And the numbers I had in August were through June. So, how have July, August, September and October done to prove me right? Or wrong?
I was mostly wrong. The rates mostly stayed the same or increased Only in 2 cases is the rate better now than the June numbers.
However, as I am writing this I looked into the chance that the federal government provides benefits:
Here’s how the system works: The jobless collect up to 26 weeks of state benefits before shifting to the extended federal program. Federal benefits consist of up to 53 weeks of emergency compensation, which is divided into four tiers, and up to another 20 weeks of extended benefits. The maximum is 99 weeks.
Small consolation, but that is why my prediction was wrong. The feds just pick up the slack.
Sigh.
I often remark on the powerful effect of incentives. Lately it’s been with creating an incentive to cross a busy freeway. My point being that the government can cause perverse incentives.
In the past I’ve mentioned that unemployment benefits create the same condition. By the nature of paying someone not to work, you create an incentive NOT to work. At lest on some level. Further, if the benefit is large enough, the individual is going to create an internal value proposition and will only return to work when that value proposition reaches an inflection point that benefits him. In other words, no one is going to work for 40 hours for $320 when he can not work for 40 hours and make $335.
For evidence, I wanna share this editorial: Hat Tip Dan Mitchell
Last year the demand for our construction services, to our delight, was as they say “going through the roof” to a point where were turning down more work than we were accepting. Frustrated that we could not be available to the potential new clients that were calling on us, and simultaneously excited that this was happening to our company, since unemployment had broken the double digits marker. I decided we would grow, work to sign up as much as 40% more in total contracts, and hire up to 12 additional full time employees. Basically take advantage of our good fortune and get a small portion of our community back to work.
The plan was initiated, the additional contracts were signed up and then we set out to hire the employees. Little did I know that attempting to hire the employees needed, which I had thought to be the easiest part, would turn out to be a nightmare if not impossible. I’m sure that reading this you will be almost as surprised as I was directly experiencing it.
My experience: Before 2009 if our company advertised for an open position, on average we would get 20 to 30 applications, interview six to eight of the applicants, and hire one or two, based on the quality and potential of the candidates. This process has been deteriorating dramatically since 2009 and now at the end of 2011 it has completely hit bottom. Of all the applications that we have received this year, when asked why they were seeking a job with us, one out of three answered: my unemployment is running out and I have to go back to work. Earlier this year after I hired two new full-time employees, went through our company’s orientation process, fitted them with our work clothing and booked them to start within a week, they both quit. One called ahead of the start date to apologize but wanted to inform us he would not be coming in because the government had just extended unemployment benefits again. The second one just did not show on his first day and when I called him he said he couldn’t come in now because unemployment had been extended and he was making almost as much as we were planning to start him out with. If this is not frustrating enough to those of us that provide jobs and pay taxes let me give you my last two attempts this year. Both times we advertised in various media at great expense. The first time only seven applicants came in, I set up personal interviews with two for potential hiring, neither of them even showed up. The second time with six applicants, I set up interviews with four, one called in to cancel the interview, one did not even show up, two actually came in, though one was late. To summarize (in case you missed the math) of the last six people that I called for interviews for potential full-time employment only two came with one being late. It is more than frustrating, it’s perverted.
If we are going to insist on providing unemployment benefits, at least reform the process so that the individual has to report to an office, perform community service when waiting for responses and allow for better monitoring.
Posted in Economics, Economy, Government, Politics: National
Tagged Incentive, Incentives Matter, Unemployment
I have long argued that if we are going to pay people not to work, we should be allowed to dictate what we want for that pay. For example, when I go to work, my boss is able to guide my activities. He gets to prioritize my day and my efforts. He gets to do this because we have entered into some agreement where I end up getting paid.
I see little difference when we provide Unemployment Benefits to folks who aren’t working.
In theory, the benefits are meant to provide some relief to the out of work individual during their time looking for gainful employment. Even while I disagree with the program, I can understand what we’re all trying to do. I really do.
However, if we are going to be spending all this money to help people out, I think that we should be able to watch over the program. For example, if we want people to find a job, we should ask that they come to a “job finding office”. That is a place where computers would be available, resume consultants and even job placement professionals. To be sure, if someone has an interview, they would be free to attend and “time off” would be accommodated.
Further, if there is time in the day when filling out applications and constructing resume’s has ended, there must, MUST, be good work the folks could engage in in an effort to “earn” the benefit pay. That good work could even be charity or community service; reading to kids or the elderly. Anything.
Well, it seems as if lawmakers are reading Tarheel Red:
A Georgia lawmaker wants the unemployed to put in community service hours in exchange for their government-paid jobless benefits.
John Albers, a Republican state senator, has proposed a bill that would require out-of-work Georgians to volunteer at charities at least 24 hours every week, according to MyFoxAtlanta.com. Otherwise, they wouldn’t receive unemployment benefits.
“We want to have a society that is responsible and that is accountable,” he said.
The lawmaker, who calls his bill the Dignity for the Unemployed Act, brushed off concerns that the volunteerism would cut into valuable job-searching time. And he said the law would provide “flexibility” so that if somebody needs to go to extra interviews one week, he or she could make up the volunteerism hours the following week.
Now, to be sure, I have some issues with the good congressman. I don’t think that we need the government to dictate charity, this sounds like Obama. And second, I would flat out give the candidate excused time for ANY work related activities. Got an interview? Go, good luck and win that job!
Certainly there is room for compromise here, yes?
I know.
I KNOW that a professional used to making North of 80k isn’t interested in hearing this. Hell, someone making 30k doesn’t wanna hear this either. But the fact is, there are jobs out there. The problem is, the government is making it impossible to fill ’em.
When a potential worker is faced with working 40 hours a week in order earn 8-9 bucks an hour [$320-$360 a week] vs. not working at all and making $310 in unemployment, it doesn’t take a rocket surgeon to figure out what’s gonna happen.
By the way, McDonalds is offering 401k, insurance, cheap food and scholarships.
There are jobs. That doesn’t seem to be the problem. We need people willing to work.
One of the most powerful lessons I’ve taken away from all the reading, studying, arguing and debating I’ve done over the past 4 years of my “political awareness” has been that of incentives. And how much they matter. And until you can admit that people are driven by incentives, in general mind you, you will never be able to understand how laws and regulations shape our world.
(AP) ONEONTA, Ala. – Potato farmer Keith Smith saw most of his immigrant workers leave after Alabama’s tough immigration law took effect, so he hired Americans. It hasn’t worked out: Most show up late, work slower than seasoned farm hands and are ready to call it a day after lunch or by midafternoon. Some quit after a single day.
Now listen, Alabama has an unemployment rate of 9.8%.
Nearly 1 in 10 Alabamians are out of work. More I’m sure, if you count the folks who’ve given up. And the numbers are worse if you add up those folks who are underemployed. Yet farmers can’t keep help.
Too be sure, the value proposition is a tough one:
It’s hot, the hours are long, the pay isn’t enough and it’s just plain hard.
…
At his farm, field workers get $2 for every 25-pound box of tomatoes they fill.
…
A crew of 25 Americans recently picked 200 boxes — giving them each $24 for the day.
That’s $3 an hour. Hardly worth downsides of the job.
Finally, and here is the kicker, the government makes it too easy to say “no” to jobs:
It may make sense for some to sit on the couch. Unemployment benefits provide up to $265 a week while a minimum wage job, at $7.25 an hour for 40 hours, brings in $290.
Who in their right mind would choose to work back-breaking jobs in order to make an effective $25 a week?
No one.
There are jobs out there all right, just that we make it too easy to say no to ’em.
Posted in Economics, Economy, Government, Politics: National, Rocket Surgery
Tagged Alabama, Incentives Matter, Unemployment