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Are the unemployed to blame for high unemployment?

Posted at 11:02 AM on August 6, 2010 by Bob Collins (13 Comments)
Filed under: Economy

The monthly jobs figure was released today and it's nothing to hold a parade over. True, 70,000 jobs were created, but the nation is in such an unemployment hole that 200,000 jobs are needed to make the unemployment rate budge.

The situation has led to an increasing debate that mirrors the 1980s debate about homelessness during which some people claimed that most people who were homeless, chose to be.

Jim Paulsen, the chief investment strategist for Wells Capital Management in Minneapolis, suggests unemployment benefits pay people to stay unemployed. Appearing on CNBC this morning, Paulsen cited a survey that says jobs are no harder to get coming out of this recession than they were coming out of previous recessions.

"If you now consider the average length of unemployment by those who are unemployed, the average duration is now 35 weeks, that's just off-the-charts record setting. The previous high historically, would be about 15-20 weeks. What's the disconnect between those two things? One thing possibly may be that we're paying people to remain on unemployment rolls," he said.

CNBC host Mark Haines was incredulous. "First of all, the average unemployment benefit is maybe a fifth of what someone made when they were employed. Second, you understand that we just came out of the worst economy since the Great Depression?" he said. "No one who's trying to feed his family is going to stay on unemployment benefits if he can get a job. What jobs are these people supposed to get?"

"The vast majority of people who are unemployed, cannot find work," Paulsen agreed. "I'm just raising the question, what do these two data points imply? If people can't find work, then why aren't more people saying that the job market is tougher than ever before?"

I know. Pick me.

Because people are being asked to compare their current experience with someone else's experience from, say, 30 years ago. The people who are looking for work now, are not the same ones looking for work in the recessions of the '70s, '80s, and '90s. They're guessing. And guesswork makes for lousy science.

That said, Paulsen never really reveals what survey he's using to draw his conclusion. He writes about it in a report his company released today, but there's no methodology revealed.

Comments (13)

When I became unemployed last year, I couldn't wait to try and find another job. UI was NOT a motivation to be lazy about it. It was only enough that I wasn't going to be thrown on the street or starve.

Posted by Paul | August 6, 2010 11:13 AM

I'm pretty sure it's not the fault of the unemployed. Maybe certain companies should redirect some of their profits and their political contribution kitties toward hiring a couple of people.

Posted by Heather | August 6, 2010 11:15 AM

What kind of delusional world do these people live in? This is nearly as bad as Ben Stein's column in the American Spectator:

"The people who have been laid off and cannot find work are generally people with poor work habits and poor personalities."

http://uspoverty.change.org/blog/view/ben_stein_unemployed_people_are_lazy_unpleasant_and_unable_to_add_and_subtract

Stay classy, investors.

Posted by TJ | August 6, 2010 11:17 AM

My wife didn't apply for 3 or 4 jobs, because they would have been a less than she was making on unemployment - it's true. And due to the way unemployment works, had she been offered any of those jobs, she would have HAD to accept them or lose benefits. Why would any sane, rational person take the job(s), however?

Posted by Tyler | August 6, 2010 11:27 AM

Of COURSE high unempoyment is the fault of the unemployed. Something like 75% of our economy is based on consumer spending, and these unemployed folks aren't doing their part to spend, spend, spend and stimulate the economy. If they'd start spending some money, we'd pop out of this recession in nothing, flat. Can't they see that?

Posted by bsimon | August 6, 2010 11:27 AM

Count me as just as incredulous about Paulsen's comments and his mystery survey. There was a great post on the MinnEcon blog not that long ago about unemployment incentives.

http://minnesota.publicradio.org/collections/special/columns/minnecon/archive/2010/07/after-a-long-fight-congress.shtml

Why might someone remain on unemployment...maybe because they only job otherwise available pays well less than the one they lost just as Tyler mentioned.

Posted by Nathan | August 6, 2010 12:47 PM

It looks like someone got shorted a compassion gene. I suppose the sick are to be blamed for the high cost of health care and victims create crime. It looks like the public schools system failed us by the generation this kind of room temperature IQ intellect.

Posted by Pete | August 6, 2010 12:52 PM

I almost get the feeling that some of these talking heads are borrowing the concept popularized in the '60s by the late Art Linkletter on "Kids Say the Darndest Things."

Their inflamed ego(s) apparently cause neural disruptions between the part of the brain responsible for analysis and their vocal cords.

They seem to be cut from the same cloth as the Senate Republicans in D.C. who seem to have cornered the market on saying things over and over to the point they (and their groupies) actually believe what they are saying.

Posted by John O. | August 6, 2010 1:24 PM

Paulson doesn't seem to understand how UI works. You have to be actively looking for work (and you be audited on your job search) and ready willing and able to take a job offered. Early on, you may get away with rejecting a job that pays considerably less than your last job, that is geographically distant, or far outside your work experience, but by the 4th month, you're going to have to accept just about any offer, or lose your benefits.

A couple of other points: A significant number of workers never qualify for benefits to begin with. Including part time or temporary workers, self employed, and "independent contract" workers.

Second, there have been reports circulating for awhile now that some employers are adding an "unemployed workers need not apply" policy to their available jobs, making the return to work all that much more difficult.

Posted by David G | August 6, 2010 1:53 PM

And this entire argument bypasses the real clear and present danger: given new technologies, we will never see full employment again UNLESS government takes a more active role in creating jobs and expanding educational opportunities.

We've let the business community run this country since 1981. The results are in. We're heavily in debt, only the children of the rich can afford to go to college, normal workers no longer see pay increases (only cuts and lay-offs), and literally all proceeds from productivity increases are given to the richest few, not the people responsible for doing the actual work.

But the worst part of this is that all of these things were achieved deliberately by a Republican party that has eschewed conservatism and gone over to the dark side of American politics: the yahooliganism of southern racism, faux populism, and the sacred belief that to the winners go ALL the spoils.

Posted by Mark Gisleson | August 6, 2010 3:16 PM

My last paid position didn't pay enough for long enough for me to get unemployment benefits right now. I have had a few interviews and certainly have been applying and sending resumes but...

Posted by J Smith | August 6, 2010 6:14 PM

From Pete above: "I suppose the sick are to be blamed for the high cost of health care."

Well actually, in a lot of cases - yes. Many Americans are notoriously bad in managing their own health. They smoke, drink, use drugs, eat horrible diets, and never get any decent exercise. The rest of us pick up the tab for these slouches.

Posted by Pete2 | August 6, 2010 7:43 PM

I blame the 199 hiring managers who’ve placed ads I’ve answered over the last 17 months in which I’ve been unemployed for not picking me (and my MBA and 12 years experience) over one of the other 300+ applicants more than I blame my UI benefit for still being unemployed.

I can tell you the UI benefit, which leaves less than $100 after paying my (conservative, not sub-prime) mortgage, utilities and insurance to buy food and gas to get to interviews is NOT an incentive to stay unemployed.

Posted by Sept 17 | August 6, 2010 9:46 PM