In general, modern conservatives believe that our national character is being sapped by social programs that, in the memorable words of Paul Ryan, the chairman of the House Budget Committee, “turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency.” More specifically, they believe that unemployment insurance encourages jobless workers to stay unemployed, rather than taking available jobs.In other words, because of the Teapublicans in our state ramming through their two-pronged assault on the unemployed, not only will Scott Walker's agenda continue to not work, it will become even more dysfunctional. Unemployment will continue to rise, more families will come into suffering, more homes will be lost.
Is there anything to this belief? The average unemployment benefit in North Carolina is $299 a week, pretax; some hammock. So anyone who imagines that unemployed workers are deliberately choosing to live a life of leisure has no idea what the experience of unemployment, and especially long-term unemployment, is really like. Still, there is some evidence that unemployment benefits make workers a bit more choosy in their job search. When the economy is booming, this extra choosiness may raise the “non-accelerating-inflation” unemployment rate — the unemployment rate at which inflation starts to rise, inducing the Federal Reserve to raise interest rates and choke off economic expansion.
All of this is, however, irrelevant to our current situation, in which inflation is not a concern and the Fed’s problem is that it can’t get interest rates low enough. While cutting unemployment benefits will make the unemployed even more desperate, it will do nothing to create more jobs — which means that even if some of those currently unemployed do manage to find work, they will do so only by taking jobs away from those currently employed.
But wait — what about supply and demand? Won’t making the unemployed desperate put downward pressure on wages? And won’t lower labor costs encourage job growth? No — that’s a fallacy of composition. Cutting one worker’s wage may help save his or her job by making that worker cheaper than competing workers; but cutting everyone’s wages just reduces everyone’s income — and it worsens the burden of debt, which is one of the main forces holding the economy back.
Oh, and let’s not forget that cutting benefits to the unemployed, many of whom are living hand-to-mouth, will lead to lower overall spending — again, worsening the economic situation, and destroying more jobs.
The move to slash unemployment benefits, then, is counterproductive as well as cruel; it will swell the ranks of the unemployed even as it makes their lives ever more miserable.
But on the bright side, Walker got his sound bite for his presidential campaign.