Thursday, September 08, 2011

Report: Extending Unemployment Benefits Increases Unemployment

A new report estimates that the U.S. unemployment rate is 0.6 percentage point higher due to the extension of jobless benefits.

The biggest rap on extended unemployment benefits is that they discourage people from going out and finding work. Their skills erode, the government is saddled with higher costs, and the unemployment rate is pushed higher. On the other side of the ledger, they help shore up the economy — the unemployed have money to spend that they otherwise wouldn’t — and it provides a safety-net at a time when the job market is very weak. Predictably, there’s lots of partisan bickering about whether the tradeoff is worth it.