NCPA - National Center for Policy Analysis

Not Helping Workers: Extending Unemployment Benefits

March 11, 2002

The extension of unemployment benefits by 13 weeks as part of the so-called economic stimulus bill will lengthen the time that people spend unemployed, warns labor expert William B. Conerly.

The faulty premise of extended unemployment benefits is that jobs are simply unavailable. However, Conerly argues that new jobs are being created, and old positions being eliminated, all the time -- a process called job "churn." When total employment was growing at two percent per year, there were still jobs being lost; but more jobs were created than lost, not counting everyday turnover due to retirements and voluntary quits.

The unemployment insurance system, though designed to help the unemployed, actually delays their reemployment.

  • Studies of young men find that those not eligible for UI -- because of little work experience or having been fired for cause -- find work more readily than similar men who are receiving UI.
  • When an unemployed person's benefits are about to expire, the probability of finding a job takes a jump upward, economists have found.
  • Thus, lengthening the UI benefit period will tend to delay reemployment.

If a poorer work history leads to more success in job-hunting, then something is wrong about our system, says Conerly. All too often the mission of state employment departments is to process claims and cut checks. Instead, the primary mission should be to help people become self-sufficient.

There are also structural changes to the federal unemployment tax system that would reduce the tax on jobs, while giving states the ability to better serve the unemployed. It is time to consider such changes, says Conerly.

Source: William B. Conerly, "Extending Unemployment," 2002, American Institute for Full Employment, 2636 Biehn Street, Klamath Falls, Ore. 97601, (541) 273-6731.


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