Let’s Not Extend “Temporary” Unemployment Insurance Again

Temporary unemployments benefits have proven to be far from temporary and are likely to be counterproductive.

President Barack Obama speaks with his chief of staff, Jack Lew, in the Oval Office of the White House in Washington DC, June 4, 2012
President Barack Obama speaks with his chief of staff, Jack Lew, in the Oval Office of the White House in Washington DC, June 4, 2012 (White House/Pete Souza)

In his weekly radio and Internet address, President Barack Obama urged Congress on Saturday to extend unemployment benefits for more than a million Americans — “the temporary insurance that helps folks make ends meet while they look for a job.”

This insurance, however, is far from temporary and likely to be counterproductive.

Congress failed to extend “emergency” unemployment benefits when it enacted a bipartisan budget agreement in December that had been negotiated between Democratic senator Patty Murray and Republican congressman Paul Ryan. The president nevertheless hailed that agreement as “a good sign that Democrats and Republicans” can work together.

Unemployment benefits haven’t expired altogether. Rather, they can now be received for a maximum of 26 weeks which used to be the norm.

For more than a decade, workers were able to collect “temporary” unemployment compensation for a longer period of time. With the economy supposedly recovering and unemployment down to 7 percent, the libertarian Cato Institute’s Chris Edwards rightly argues that it is high time for this “temporary” insurance to end.

He also point out that extending these benefits for another year would cost approximately $25 billion, money the government doesn’t have. “It would have to borrow every cent of the added spending and thus impose those costs (plus interest) on working Americans in the future.”

Finally, extending unemployment insurance could prove counterproductive. Employers are biased against hiring those who have been out of work for a long time while generous benefits discourage the unemployed from accepting work they consider less than optimal — thus gradually making them less and less employable.

It may be hard for unemployed Americans to find a job but extending once temporary benefits in the very “short sighted, crisis driven decisionmaking” the president last month derided would probably do more harm than good.

Leave a reply