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The Jobs-Killing, Unemployment-Insurance-Eliminating "JOBS Act"

May 12, 2011 - by Donny Shaw

One of the final acts of the last session of Congress was passing legislation to keep extended unemployment insurance benefits for the long-term unemployed available into 2012. Their reason for doing so was, of course, to ensure that the hardest-hit victims of the ’08 economic crisis would have some form of financial support while the jobs market remains weak. Well, the jobs market is still weak, but Republicans in the House are moving to scale back the extended unemployment insurance benefits with a new bill they are calling the “Jobs, Opportunity, Benefits, and Services Act of 2011,” or the “JOBS Act.”

The bill would turn the $32 billion that would be made available for unemployment insurance programs under current law into flexible block grants for states to spend in other ways. States could continue to use the money for unemployment insurance, but they would also have the option to reduce or eliminate the extended unemployment insurance program, which is financed by money loaned from the federal government, and instead use the federal money to pay back their debt obligations (PDF) to the federal unemployment trust funds. Some states with particularly high unemployment rates and particularly deep financial troubles, like Florida and Michigan, have already begun the process of scaling back benefits once the current federal law expires. You can be sure that if the JOBS Act becomes law they’ll take the opportunity to scale back almost immediately.

Without the JOBS Act, states would have to find other ways of paying back the funds. That would likely mean some form of tax increase. Under the JOBS Act states would be able to avoid putting this burden on corporations and individual taxpayers and instead put it on the unemployed who have been unable to find work through no fault of their own. From that angle, it can be seen as a sharp political move — limit the burden on the wealthy who have money and time to invest in political campaigns and shift it to the middle class and poor who don’t have as many resources to reward politicians.

What’s especially ironic about this bill, given its title, is that economic impact studies show, very clearly, that spending on unemployment insurance creates more jobs than just about any other investment a government can make. The liberal-leaning Economic Policy Institute explains:

The $40 billion in economic activity generated by the EUC and EB programs under current law would create around 322,000 jobs.

Spending on unemployment insurance programs gives the economy its biggest bang for the buck in terms of job creation because the GDP multiplier effect of unemployment compensation—which CBO estimates in a range from 0.7 to 1.9—is greater than any of the other possible uses under the proposed Act. Putting cash in the hands of unemployed workers generates more economic activity than any other option: it results in more consumption of goods and services produced by private-sector businesses, generating more economic activity by their suppliers and contractors.

But if the states choose not to spend the money on EUC and EB, some funding options will be better than others. For example, if a state uses its share of the $31 billion to pay down its debts to the federal UI trust funds, it will remove that amount of money from the economy, generate no new economic activity, and create no jobs at all.  Likewise, if a state chooses to eliminate EUC and EB and instead deposit its share of the federal funds into its UI trust funds to improve their balance, the money will be removed from circulation and create no jobs at all.

The bill was passed out of the House Ways and Means Committee yesterday by a 20-14 vote and will likely hit the full House soon. Frustratingly, the House Ways and Means Committee does not published roll call details, so there’s no way to know for sure how individual members voted. But extrapolating from the committee membership and the vote total, it looks like the vote followed party lines very closely. That suggests that the bill doesn’t stand much of a chance in the Democratically-controlled Senate.

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Comments

Displaying 1-30 of 76 total comments.

  • Bonhoeffer 05/12/2011 5:16pm

    I do not have a problem with the ‘scale back" of UE benefits. In the long run, states which are already in debt will benefit from the move. How? It removes the option to continue sitting on one’s ass and collecting money rather than formulating an activeplan of action rather than a passive one. the jobs market is still hurt in many regions of the country. There are, however, regions of the country which have plenty of opportunity. So, you may have to rethink how you have been geeting paid and move on to another state. Or maybe its time to learn something new ( so what if you are 50 plus years of age). The use of the funds in a different direction is the use of them in the original direction as they were used during the time of FDR: the revamping of our Railway system , Preservational Constuction of the “old landmarks” etc. Complaining is not going to help, but creative thinking will. Let every state discern & assess the state and condition of its flocks and herds accordingly.

  • Bonhoeffer 05/12/2011 5:19pm

    I do not have a problem with the ‘scale back" of UE benefits. In the long run, states which are already in debt will benefit from the move. How? It removes the option to continue sitting on one’s arse and collecting money rather than formulating an active plan of action in place of a passive one. the jobs market is still hurt in many regions of the country. There are, however, regions of the country which have plenty of opportunity. So, you may have to rethink how you have been geeting paid and move on to another state. Or maybe its time to learn something new ( so what if you are 50 plus years of age). The use of the funds in a different direction is the use of them in the original direction as they were used during the time of FDR: the revamping of our Railway system , Preservational Constuction of the “old landmarks” etc. Complaining is not going to help, but creative thinking will. Let every state discern & assess the state and condition of its flocks and herds accordingly.

  • fakk2 05/12/2011 6:36pm

    Without the JOBS Act, states would have to find other ways of paying back the funds. That would likely mean some form of tax increase

    So….my taxes go up so my neighbors can get paid? Yeah, I don’t think that’s the direction I’d want to go.

    Under the JOBS Act states would…instead put [the burden] on the unemployed who have been unable to find work through no fault of their own.

    If you’ve been out of work for 3, going on 4 years, something more than just your age is at play, and it’s time to take some personal responsibility for the situation.

    Putting cash in the hands of unemployed workers generates more economic activity than any other option

    How about the option of never taking the money from me in the first place?! There’s a lot more workers than unemployed, so if they hadn’t taken the money from the workers to begin with, wouldn’t more businesses have enjoyed more spending and higher economic activity? Why not give the money back to us instead of the unemployed?

  • valleri 05/12/2011 10:18pm

    I support scaling back unemployment benefits. However, I also support addressing the trade agreements that have caused millions of jobs to flee the USA. It takes more workers to manufacture products then it does to move them from a ship to store shelves. Getting manufacturing back in the USA is essential to reducing unemployment and balancing our budget.

  • Legion1 05/13/2011 1:09am

    You clowns (Bonhoffer & fakk2) crack me up. What don’t you two don’t seem to understand about todays job market is that there are (at least) 5 people for every available job? McDonalds much ballyhooed recent hiring gimmick of hiring 50,000 (something they do every spring) people turned out to be hiring 62,000 people. However…1 million people applied for those 62,000 jobs. If my math is correct, that’s about 19 applicants for every available job. Get it into your foolish heads…THE JOBS AIN’T THERE FOR THE UNEMPLOYED. We earned the right to collect unemployment benefits by working…period. Now scummy ’pubs are trying to slide another fast one into law under the name of “Jobs, Opportunity, Benefits, and Services Act of 2011,” or the “JOBS Act.”

    Jobs have nothing to do with this deceitful bill. Robbing the unemployed does, EOS. Just another gift to corporate America

  • luminous 05/13/2011 2:16am

    Employment benefits don’t just benefit the 6 million(?) people receiving them, Those people also represent 6 million people that can continue to participate in the economy, These are 6 million people that will continue to shop at their local stores and the basics of life(food/gas/diapers whatever), but also represent 6 million people that can remain in their homes instead of being pushed into bankruptcy and further damaging the economy, These are 6 million that continue to make their credit card payments making banks able to keep open consumer lending.

    Unemployment benefits is only 65% of the income you made in your previous job, no body wants to be stuck on it any longer then they have to be. And to think that pulling the rug out will benefit anyone is just idiotic, thank $diety this piece of crap of a bill will never make it passed the senate.

  • fakk2 05/13/2011 2:41am

    Look legion, other than your blatant disrespect for anyone who doesn’t agree with you, here’s the facts: You earned nothing. There’s no “right” to living off someone else’s money. There’s no “right” to having someone else support you. And if there’s not a job available, then why not make a job? Oh yeah, I forgot, when we last talked it was said that taking a minimum wage job was closer to slave labor than anything else. And I’m sure with being out of work for 2+ years, any job you create would be at or less than minimum wage.

    BTW, if it’s not your money to begin with, then who is robbing whom “Little John”?

  • fakk2 05/13/2011 2:44am

    and luminous, the question still is: Instead of giving 6 million people money that the other 50 million worked for (tax redistribution), wouldn’t more economic activity have been created if those 50 million had kept their money? Even more so, wouldn’t more charity have been created?

  • DAPHENA 05/13/2011 8:35am

    It is so unfortunate that working people cannot understand the plight of the UNEMPLOYED. (1) PEOPLE ENTITLED TO UNEMPLOYMENT WERE WORKING!! They kept their credit scores up, they are educated, they saved in their 401-Ks, they had job stability, etc. They contributed to our capitalistic society. Workers prepared for their rate of income by education and job stability. At 50+ should people work for a minimum wage ($8) that DOES NOT PAY for their basic needs and lose everything they acquired in their lifetime? Most are willing to take ANY job (when they can find one)? BUT employers are not willing to hire seasoned workers. Without social services (state funds) many would PERISH! Unemployment does not provide a lavish lifestyle!! American’s welfare should take priority!! It provides a life line in a society drowning in debt.

  • DAPHENA 05/13/2011 8:41am

    It is so unfortunate that working people cannot understand the plight of the UNEMPLOYED. (1) PEOPLE ENTITLED TO UNEMPLOYMENT WERE WORKING!! They kept their credit scores up, they are educated, they saved in their 401-Ks, they had job stability, etc. They contributed to our capitalistic society. Workers prepared for their rate of income by education and job stability. At 50+ should people work for a minimum wage ($8) that DOES NOT PAY for their basic needs and lose everything they acquired in their lifetime? Most are willing to take ANY job (when they can find one)… BUT employers are not willing to hire seasoned workers. Without social services (state funds) many would PERISH! Unemployment does not provide a lavish lifestyle!! American’s welfare should take priority!! It provides a life line in a society drowning in debt.

  • DAPHENA 05/13/2011 8:55am

    It’s easy for you to say “move to another state” and get “re-educated/re-skilled,” both of which cost PLENTY of money!!! It is unlikely for an unemployed person to have the funds to make the move happen. Also your life needs to be stabilized when you are going to school (and not in a state of flux). If employers will not hire seasoned workers (who have more health issues), why then, would older workers get good jobs down the road when they have gained new skills? Your ideas do not make sense and are not thought out.

  • DAPHENA 05/13/2011 9:00am

    It’s easy for you to say “move to another state” and get “re-educated/re-skilled,” both of which cost PLENTY of money!!! It is highly unlikely for an unemployed person to have the funds to make the move happen. Also your life needs to be stabilized when you are going to school (and not in a state of flux). If employers will not hire seasoned workers for whatever reasons and in part because they have more health issues, why then, would older workers get good jobs down the road when they have gained new skills? Your ideas do not make sense and are not thought out.

  • eth111 05/13/2011 9:16am

    It is interesting to me to see how well indoctrinated people are in the sophisms of benevolent government assistance. The reason that we are in the boat that we are is because the government can’t keep their grubby fingers out of the economy. Let me clarify;
    1) Trade agreements are not the reason jobs left the US. Taxes and ridiculous wage demands are.
    2) Minimum wage pays better than not working (anything is greater than 0).
    3) When UE provides a bigger check than a minimum wage job, there is no incentive to go back to work.
    4) Just because you worked doesn’t mean you are entitled to other peoples’ money and, by the way, your UE premium is paid by your employer, not you.
    5) Government money does not grow on trees, it has to be taken forcefully from the People.
    6) No article by Donny Shaw on this site is ever non-partisan, so either OpenCongress should lose the non-partisan label or fire Donny Shaw.

  • fakk2 05/13/2011 9:39am

    whoah eth111, totally not expecting the last bulletpoint there!

  • luminous 05/13/2011 11:49am

    “wouldn’t more economic activity have been created if those 50 million had kept their money? Even more so, wouldn’t more charity have been created?”

    No to both questions. Their is no shortage of investment money in an advanced capital economy. Pretty much all of the economic opportunities that have a net positive return have been taken, and through charity most of the economic opportunities that have small negative returns have also been taken.

    The problems left over (unemployment, health care for the poor, etc) have a large negative return rate and are not within the capacity of the private investment to handle as private investment REQUIRES as positive return. Nor can charity handle the issue and charity can only handle situations of small negative return rates.

    Without unemployment maintaining the buying power of those 6million people many many more of those in the 50 million would be joining the ranks of the unemployed.

  • Angelicrisis 05/13/2011 12:50pm

    I have a hard time believeing that American citizens have a hard time understanding that there are not enough jobs for their fellow American citizens so they bash them and degrade them. When in all reality its Washington that needs to be looked at closer. There is enough money. There is enough money for 3 wars, off shore relief (Why help off shore when you are too arrogant to help you own), there was 26 trillion stolen from us that we still don’t have back, corporate walfare, ponzi schemes, and black projects, and you are going to let millions upon millions, of decent people suffer? It’s disgusting and alot of people and politicians should be ashamed, but that would require a concious and some humanity.

  • fakk2 05/13/2011 12:54pm

    Here’s what I’m thinking luminous, and maybe I’m wrong, but here’s what makes sense:

    UI has to be first taken from a company. Becuase the majority of companies are small businesses, that means most UI is paid by companies with under 500 or 100 employees depending on the type of business it is. This means that someone, somewhere, is not receiving a bonus because of the extra tax (not all the important, but that’s how I see it relating). Once UI is taken from a company, it is given to someone who doesn’t work at the company. That person then spends it in his/her community.

    My reasoning is that if it had never been taken from the companies, the buying power wouldn’t have been less, but actually greater, because FEWER people would need to rely on government services, which lowers the burden for all. And it’s possible the companies would’ve saved the money, or still laid off 1 or 2 people, but it’s also possible they would’ve spent it instead on keeping those 1 or 2 people.

  • galaxia2345 05/13/2011 1:08pm

    I agree. People who have been out of work for 3 to 4 yrs are looking for work at a pay they use to have instead of looking at the reality of what they don’t have. I know someone who applied for jobs after jobs and did not get hired. Each job said your resume shows you are over qualified. We kept saying DUMB down your resume and finally that worked, but the job did not pay as much as the previous job nor was it as nice. BUT IT IS A JOB. If you try to find a job every day you sit on your rear end you would have one.

  • fakk2 05/13/2011 1:17pm

    Here’s a question Daphena proposed earlier:

    At 50+ should people work for a minimum wage ($8) that DOES NOT PAY for their basic needs and lose everything they acquired in their lifetime?

    The answer: Yes. A job is a job. I’d even go farther and say they should work for the federal minimum wage ($7.25/hr) instead of relying on UI.

    It’s finally good to hear someone agree for a change galaxia2345 ;)

  • craines 05/13/2011 1:20pm

    You boys are ignorant THERE’S NO WORK . . . and the republican haven’t done shit to
    create any either. And there not going too. So take your options and shove it, if I had you in front of me I’d slap the shit out of all of ya.

    this job market sucks … that’s all there is to it. You can’t even work a minim wage job because of the price of gas.

    Stuff it.

  • fakk2 05/13/2011 1:46pm

    craines, your comment is a prime example of why people are willing to live off UI instead of working, even if all they can find is a minimum wage job: because “it’s not worth it”. I’m not willing to support the idea that a minimum wage job is below anyone who doesn’t have a job. Hopefully, Congress will not support your line of thinking either. It may be time to call my Representative again.

  • luminous 05/13/2011 1:52pm

    “People who have been out of work for 3 to 4 yrs are looking for work at a pay they use to have instead of looking at the reality of what they don’t have.”

    Unemployment lasts 99 weeks, that is little under 2 years, those who have been unemployed for 3 to 4 years have long sense lost everything and become a drain on the economy. Second those 99 weeks are not available in all states, Only the States with the highest unemployment rates have this term(most places it only lasts for 58 weeks).

    You can’t make house payments with a minimum wage job, the ex $25hour factory worker taking the Mcd’s job over unemployment is no different then simply declaring bankruptcy and losing everything( home, family, health insurance) and defaulting on all other obligations(student loans, credit cards, the vehicle necessary to do job searching etc).

  • luminous 05/13/2011 1:52pm

    That little extra “bonus” from the non-collection of UI taxes isn’t going to do anything for you when you have less customers and higher interest rates, to say nothing of the increased crime rate from desperate people who have nothing to lose, and the lost opportunity cost from the following restriction of credit due to increases in bankruptcy.

  • fakk2 05/13/2011 2:01pm

    You can’t make house payments with a minimum wage job, the ex $25hour factory worker taking the Mcd’s job over unemployment is no different then simply declaring bankruptcy and losing everything( home, family, health insurance) and defaulting on all other obligations(student loans, credit cards, the vehicle necessary to do job searching etc).

    So are you saying it’s better to just collect money from businesses you don’t work for instead of working a minimum wage job?

    That little extra “bonus” from the non-collection of UI taxes isn’t going to do anything for you when you have less customers and higher interest rates

    Luminous, the average unemployment has hovered around 3 million people for years, if not decades, before 2008. It’s only an additional 3 million we’re talking about (lots of people still, but not that high compared the amount of people in America). Also, they haven’t increased interest rates for most companies, so where does that come in?

  • dianambowman 05/13/2011 5:26pm

    Regarding: The Jobs-Killing, Unemployment-Insurance-Eliminating “JOBS Act”
    May 12, 2011 – by Donny Shaw
    Am I reading this correctly: if so, it’s REVERSE ROBINHOOD – steal from the poor, give to the rich — where are the REAL people trying to help society and the economy without a personal, self-profiteering agenda? @cnn, #cnn, #help_anybody

  • fakk2 05/13/2011 5:38pm

    dianambowman,

    how can the poor be stolen from if they don’t own the money to begin with?

  • luminous 05/13/2011 6:09pm

    “Also, they haven’t increased interest rates for most companies, so where does that come in?”

    How do you think banks pay for loans that are defaulted on? More defaults means higher interest rates, has nothing todo with the government this is a market reality.

    “So are you saying it’s better to just collect money from businesses you don’t work for instead of working a minimum wage job?”

    If a minimum wage job can’t pay the bills then bankruptcy is the conclusion. Why is this hard to understand, a minimum wage job can’t pay the bills. And I am not talking about anything extra or spending/saving money, I am talking just the mortgage, the car, and any existing CC balances.

    In the average bankruptcy $72,000 dollars is written off, this comes out of your pocket in high interest rates, lose of homes causes lower property values, lose of car makes it difficult for people to search for a job suited to their skill set, etc etc etc.

  • fakk2 05/13/2011 9:36pm

    How do you think banks pay for loans that are defaulted on?

    Good question, here’s how: Fees and Investments. I’m assuming you’re talking about higher interest rates for the defaulted borrower or variable rates on credit cards, and lines of credit, since someone locked into a non-variable APR cannot have their interest rate changed arbitrarily.

    a minimum wage job can’t pay the bills

    Only if you’re not willing or not able to live a VERY low lifestyle. Millions of people every day live on minimum wage. It is possible. Albeit, for a lot of people, that would not be ideal or a possibility for their specific situation.

  • fakk2 05/13/2011 9:37pm

    BTW about your, “mortgage, the car, and any existing CC balances”, since we’re talking about people without jobs for 58+ weeks (1+ yr), why do they still have a mortgage? SELL or let the bank own it! Since most laid off workers that we’re talking about are in metro areas, why can’t they take the bus or carpool, or MOPED it! And if you’re out of work for 1+ years, why are you paying CC limits instead of buying food for the table? (btw, is it my fault they maxed themselves out on credit cards? Should my company have to pay for that mistake?)

    Don’t forget luminous, we’re talking about HOW to spend the money that’s already appropriated, not whether or not to appropriate money. We’re discussing whether to pay off debt, put more money in state trust funds, or give to people as UI or some other assistance. Although I don’t believe my company, or myself, owes anything else to someone on UI for 1+ years, it’s a moot point. The money’s already there. Now what do we do with it? …(continued)

  • fakk2 05/13/2011 9:37pm

    Should we forcefully take money from “Mom&Pop Company A” to pay “Mr. Non-Worker”, or should we replenish depleted funds, or maybe something great like grow job growth by giving block grants to developing businesses?

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