Natural experiment on unemployment compensation

[Rshermr]

Let me make this simpler UE is overwhelmingly a blue state problem. Blaming Rs for taking advantage of D idiocy is dumber than dog squat. If you don't like the results of D policy then stop voting for them. This is not an economic thread this is an apologetic for Dumber party incompetence and corruption masquerading as an economic thread. Sorry 3 to 1 advantages in GDP for red states are not caused by the GOP which is nearly as incompetent and corrupt as the Ds but by Ds striving mightily to be the Dumber of Dumb and Dumber. Apparently I was way too polite and diplomatic in my first post I hope I have corrected that error.

So, what was it that those R's did to decrease unemployment???
By the way, you are wrong. It is not overwhelmingly ANY political parties problem. That would just be you showing that you are a tool. Though, so far, repubs have brought forth NO program to decrease the ue problem. Because, they, as do you, love to point at high ue rates. Because they, as you, are traitors to the country. To hell, they say, to the workers as long as they can blame their lack of effort on the dems.
Maybe we should all vote to do as Reagan did after he faced his self created highest since the great depression ue rate of 10.8%. But not today's R's. They prefer to do nothing and pretend that the problem is all a D problem.

 

[RandomVariable]

What is ridiculous is to say there is not structural unemployment. There are no jobs in rural American. There are no jobs in the inner city.

I never said structural unemployment did not exist, just that it cannot explain large sudden changes in unemployment. Do you believe that it does? If so, how do you explain the changes in 1940 and in 2009 I referred to?

All this talk of learned dependence is from those who have gained from an 'evolving/changing/structurally different' economy who do not want to assist in providing the means to does who 'have not/can not' adapt, such as those in rural America and the inner city. This country was not built on 'I've got mine, screw you' and we should not start now.

I agree with you. The solution to structural unemployment is a two tier solution. First raise aggregate demand sufficiently to increase the demand for labor so there are more jobs relative to the number of people looking for work and let markets do what they are intended to do. Secondly address specific barriers to labor market mobility. I suggest that in addition to job training and education, both urban and rural labor markets have access problems which transportation policy can address. Affordable child care can also significantly increase access to jobs.

To the right, labelling unemployment as structural is an excuse to do nothing about it; implicitly blaming workers for high unemployment. Structural unemployment can be reduced by public policy to the gain of real growth in the economy at large as well as the workers involved. The only parties that lose are the Leona Helmsley's of the world who bemoan the lack of sufficient "little people" to exploit and shift the burden of taxation to.

I apologize for jumping on your post so harshly. Structural change is something I have been rattling around in my head lately. I think we agree mostly but there are some significant differences in our assessments so they are worth exploring.

I assume you meant 1930. Yes and no on those two historical times as structural changes. As I believe you would agree one can not get a sudden collapse without something being inherently wrong within the structure. I think we have the same understanding whatever the semantics used.

Your agreement is our disagreement. I do not believe that aggregate demand can be raised sufficiently. The reason why is because there has been structural change, there is always structural change, and previous business models are not working. The divergence is getting further and further all the time. This leads to the second suggestion, labor mobility. There are no jobs in rural America or the inner cities but one can not go chasing jobs from there to somewhere else. One of my favorite, maybe the favorite, phrases is, "Cast Down Your Bucket Where You Are." Whatever the new economy is, and no one knows, it will have to grow from where people are. I do agree wholeheartedly with training and education but think about child care. In inner cities and rural America child care might be much less of a problem due to the greater chance of extended family at hand.

In this sense I am more in line with with the Progressive Caucus or Black Caucus' budgets than with the President's budget. Ryan's budget is not only Draconian it is the fast way to ruin that could possibly be conceived. The Ryan budget is the deer in the headlights, frozen with fear. The President's budget addresses the problem with the right attitude but if one really reads the conclusions which are found in the research we need to put pretty much every last dime we can beg, borrow, or steal into our future and the dividends will be multiples on the dollar.

So we agree and we disagree. There is no disagreement that we agree America has potential far greater than what is being realized now.

 

[oldfart]

I apologize for jumping on your post so harshly.

No problem. Your posts usually have some thought behind them so I try to extend the benefit of the doubt. Besides, I get overextended from time to time. Back in '77....

Structural change is something I have been rattling around in my head lately. I think we agree mostly but there are some significant differences in our assessments so they are worth exploring.

I assume you meant 1930. Yes and no on those two historical times as structural changes. As I believe you would agree one can not get a sudden collapse without something being inherently wrong within the structure. I think we have the same understanding whatever the semantics used.

Structural unemployment is a concept a lot like secular stagnation; it can be valid in looking at growth and long term trends, but it can't just double in a few months. Structural unemployment does not explain recessions or depressions and neither does secular stagnation. In the same way business cycle theory cannot explain persistent
unemployment (which structural unemployment does) or slowing long term economic growth (which secular stagnation does).

Your agreement is our disagreement. I do not believe that aggregate demand can be raised sufficiently. The reason why is because there has been structural change, there is always structural change, and previous business models are not working. The divergence is getting further and further all the time. This leads to the second suggestion, labor mobility. There are no jobs in rural America or the inner cities but one can not go chasing jobs from there to somewhere else. One of my favorite, maybe the favorite, phrases is, "Cast Down Your Bucket Where You Are." Whatever the new economy is, and no one knows, it will have to grow from where people are. I do agree wholeheartedly with training and education but think about child care. In inner cities and rural America child care might be much less of a problem due to the greater chance of extended family at hand.

My point is that with inadequate demand, there is no policy for structural unemployment that works well. If an economy does not grow, then all job training does is rearrange who the unemployed are.

The issues of child care and transportation are questions of access. When the jobs exist, people must still be able to access them. Some of this the market will automatically do. In the 60's I observed buses in Chicago paid for by employers going into poor neighborhoods to transport workers to factories in the suburbs. Land was cheaper there (if the factories had remained near the poor neighborhoods workers would have walked or used public transportation, but you don't walk from the Stockyards to West Chicago and public transportation didn't run between the two areas and low income factory workers in Chicago didn't own cars) and it was more profitable to move the workers than move the factory. The better solution would have been public transportation between the areas, but employers couldn't wait for the politics to be worked out. End of labor shortage.

In this sense I am more in line with with the Progressive Caucus or Black Caucus' budgets than with the President's budget. Ryan's budget is not only Draconian it is the fast way to ruin that could possibly be conceived. The Ryan budget is the deer in the headlights, frozen with fear. The President's budget addresses the problem with the right attitude but if one really reads the conclusions which are found in the research we need to put pretty much every last dime we can beg, borrow, or steal into our future and the dividends will be multiples on the dollar.

From your lips to voters ears.

 

[oldfart]

This is not an economic thread this is an apologetic for Dumber party incompetence and corruption masquerading as an economic thread.

The OP was deliberately provocative. Compare the response of this thread to my Irving Fisher thread and you see why I do it. That doesn't mean there is not real economic analysis involved.

I'm not the one who hit the airways proclaiming that unemployment would wither away if we cut unemployment benefits. Did you miss Fox News for the entire month of January?

Apparently I was way too polite and diplomatic in my first post I hope I have corrected that error.

I'll spot anyone a bad day or a bad post now and again. But boy is this one a doozie!

 

[RandomVariable]

I apologize for jumping on your post so harshly.

No problem. Your posts usually have some thought behind them so I try to extend the benefit of the doubt. Besides, I get overextended from time to time. Back in '77....

Structural change is something I have been rattling around in my head lately. I think we agree mostly but there are some significant differences in our assessments so they are worth exploring.

I assume you meant 1930. Yes and no on those two historical times as structural changes. As I believe you would agree one can not get a sudden collapse without something being inherently wrong within the structure. I think we have the same understanding whatever the semantics used.

Structural unemployment is a concept a lot like secular stagnation; it can be valid in looking at growth and long term trends, but it can't just double in a few months. Structural unemployment does not explain recessions or depressions and neither does secular stagnation. In the same way business cycle theory cannot explain persistent
unemployment (which structural unemployment does) or slowing long term economic growth (which secular stagnation does).

Your agreement is our disagreement. I do not believe that aggregate demand can be raised sufficiently. The reason why is because there has been structural change, there is always structural change, and previous business models are not working. The divergence is getting further and further all the time. This leads to the second suggestion, labor mobility. There are no jobs in rural America or the inner cities but one can not go chasing jobs from there to somewhere else. One of my favorite, maybe the favorite, phrases is, "Cast Down Your Bucket Where You Are." Whatever the new economy is, and no one knows, it will have to grow from where people are. I do agree wholeheartedly with training and education but think about child care. In inner cities and rural America child care might be much less of a problem due to the greater chance of extended family at hand.

My point is that with inadequate demand, there is no policy for structural unemployment that works well. If an economy does not grow, then all job training does is rearrange who the unemployed are.

The issues of child care and transportation are questions of access. When the jobs exist, people must still be able to access them. Some of this the market will automatically do. In the 60's I observed buses in Chicago paid for by employers going into poor neighborhoods to transport workers to factories in the suburbs. Land was cheaper there (if the factories had remained near the poor neighborhoods workers would have walked or used public transportation, but you don't walk from the Stockyards to West Chicago and public transportation didn't run between the two areas and low income factory workers in Chicago didn't own cars) and it was more profitable to move the workers than move the factory. The better solution would have been public transportation between the areas, but employers couldn't wait for the politics to be worked out. End of labor shortage.

In this sense I am more in line with with the Progressive Caucus or Black Caucus' budgets than with the President's budget. Ryan's budget is not only Draconian it is the fast way to ruin that could possibly be conceived. The Ryan budget is the deer in the headlights, frozen with fear. The President's budget addresses the problem with the right attitude but if one really reads the conclusions which are found in the research we need to put pretty much every last dime we can beg, borrow, or steal into our future and the dividends will be multiples on the dollar.

From your lips to voters ears.

So while persistent unemployment might be explained by structural unemployment and Summers and Krugman might be going back and forth over the merits of secular stagnation as an appropriate tool to asses economic growth I don't understand much of what they are talking about. They discuss the forest and all I know of is the trees. Knowing a tree can sometimes be helpful in diagnosing the forest, be it structurally or secularly.

Let's take a look at that guy on the bus for example, the one from the poor neighborhood of Chicago. Let's move back one step to get a better sense of the progression of things. Let's give this guy a name. Sam is a nice short name. Before getting a job at the factory Sam was living with his wife and small child in a small apartment. His wife had a job in the market down the street. She made a little money but the family had to use food snaps and whatever other assistance they could get. Sam had no job. When Sam went to the store to pick up a package of diapers he would often pick up a bottle of rock gut and some smokes. He was moody and his wife tolerated him but not very well. Things picked up one day. Ryan's budget passed Congress and the President signed it. Soon after the economy picked up. A factory was built in the suburbs and needed workers. At first Sam did not think he would be able to get a job that far out but it turned out the company was supplying a bus. Sam jumped on the chance to be the breadwinner of the household. Unfortunately the Ryan budget did not include anything for childcare so his wife had to watch the kid. Sam worked full time plus any extra hours he could pick up but still was barely making any more than his wife had. Sam's mood soon went back to being depressed and temperamental. He would still occasionally pick up the bottle of rock gut and smokes when he got off the bus at night with the rest of his worn out coworkers. Government help had been cut drastically so he could afford the extras even less than he could before. One day the bus did not show up. News came around the jobs had moved overseas. People could go by the factory and pick up their last check. Sam caught a ride out with a friend. On his way out of the apartment Sam share some choice words with his wife and left to a fuming wife and a bawling kid. On the way back he picked up two bottles of rock gut. In the morning he woke to a splitting headache and a suitcase staring him in the face. He found himself the cheapest place he could to stay. A friend hooked him up with a part time job in a warehouse. He heard some stuff about the Democrats taking the House but none of that stuff had anything to do with him. A couple weeks later his buddy said he was going over to the community college to sign up for a couple of classes and ask Sam if he wanted to tag along. Next thing Sam knows he is spending his free time trying to work through intro algebra and lit 101. Walking back to his place one day he turns the corner and runs into his wife, not literally. They get to talking. Sam has been putting back a little money and he asks if his wife and kid would join him and go to the jazz club that just opened down the street. (Don't worry, he is not blowing all his government aid, it's not the kind of jazz club most of you are familiar with. Good Chicago jazz like to started out as.) The night ends with an understanding and a second go at it. In the morning Sam wakes up to his better half, which he decides is much better than waking up to a sofa cushion smelling like an ashtray and drool. If Ryan wants to understand the American Negro and the breakdown of the family he would do better not to look at a book from 1965 but at a couple used text books and a loose leaf binder from the local community college sitting on the kitchen table.

 

[oldfart]

So while persistent unemployment might be explained by structural unemployment and Summers and Krugman might be going back and forth over the merits of secular stagnation as an appropriate tool to asses economic growth I don't understand much of what they are talking about. They discuss the forest and all I know of is the trees. Knowing a tree can sometimes be helpful in diagnosing the forest, be it structurally or secularly.

I was going to comment on types of unemployment (frictional, cyclical, structural etc.) and realized that's the approach making people's glaze over. So instead, I'll take your advice and look at trees.

Let's take a look at that guy on the bus for example, the one from the poor neighborhood of Chicago. Let's move back one step to get a better sense of the progression of things. Let's give this guy a name. Sam is a nice short name. Before getting a job at the factory Sam was living with his wife and small child in a small apartment. His wife had a job in the market down the street. She made a little money but the family had to use food snaps and whatever other assistance they could get. Sam had no job. When Sam went to the store to pick up a package of diapers he would often pick up a bottle of rock gut and some smokes. He was moody and his wife tolerated him but not very well. Things picked up one day. Ryan's budget passed Congress and the President signed it. Soon after the economy picked up. A factory was built in the suburbs and needed workers. At first Sam did not think he would be able to get a job that far out but it turned out the company was supplying a bus. Sam jumped on the chance to be the breadwinner of the household. Unfortunately the Ryan budget did not include anything for childcare so his wife had to watch the kid. Sam worked full time plus any extra hours he could pick up but still was barely making any more than his wife had. Sam's mood soon went back to being depressed and temperamental. He would still occasionally pick up the bottle of rock gut and smokes when he got off the bus at night with the rest of his worn out coworkers. Government help had been cut drastically so he could afford the extras even less than he could before. One day the bus did not show up. News came around the jobs had moved overseas. People could go by the factory and pick up their last check. Sam caught a ride out with a friend. On his way out of the apartment Sam share some choice words with his wife and left to a fuming wife and a bawling kid. On the way back he picked up two bottles of rock gut. In the morning he woke to a splitting headache and a suitcase staring him in the face. He found himself the cheapest place he could to stay. A friend hooked him up with a part time job in a warehouse. He heard some stuff about the Democrats taking the House but none of that stuff had anything to do with him. A couple weeks later his buddy said he was going over to the community college to sign up for a couple of classes and ask Sam if he wanted to tag along. Next thing Sam knows he is spending his free time trying to work through intro algebra and lit 101. Walking back to his place one day he turns the corner and runs into his wife, not literally. They get to talking. Sam has been putting back a little money and he asks if his wife and kid would join him and go to the jazz club that just opened down the street. (Don't worry, he is not blowing all his government aid, it's not the kind of jazz club most of you are familiar with. Good Chicago jazz like to started out as.) The night ends with an understanding and a second go at it. In the morning Sam wakes up to his better half, which he decides is much better than waking up to a sofa cushion smelling like an ashtray and drool. If Ryan wants to understand the American Negro and the breakdown of the family he would do better not to look at a book from 1965 but at a couple used text books and a loose leaf binder from the local community college sitting on the kitchen table.

My story came from personal observation 1967--8 when I was courting Mrs Oldfart in Glenview, where she was doing shift work at Chicago Metallic summers running a degreasing station. Throw in the Rocky Horror Picture Show "Time Warp" number and we are there. When I taught labor economics in the early 70's I used two books by former Secretaries of Labor: Ray Marshall's "The Negro Worker" and Juanita Kreps "Sex in the Marketplace". Fifty years later that is still where I would start.

You nailed the old neighborhood. I owe you an Oldtown deep dish pizza. Or maybe one from Navy Pier. And Chic Civilek is probably running numbers out of the same bar in Skokie. Just don't bet against the Bears there.

 

[RandomVariable]

Since I did the story of Sam in the city I wanted to do the same for Bill in the country. Kind of lame but fun so here it goes:

Bill lives by himself in a small house a few miles out of town. Bill was married but the relation just faded away and now his x lives happily in the big city with her new husband and family. Veterans benefits and odd jobs fixing up aging farm machinery keeps him fed and satisfied with life. It makes little difference to him personally when Ryan's budget is passed and is signed into law. He keeps abreast of news well enough to know some of the people around these parts are going to be pretty stressed though. Life gets a little harder for those with it hard. So far nobody has starved, although it does not look that far off for some. Help from the government is near all some of these people have. It doesn't take his years of reading whether someone wants to kill you to see the look of worry on the faces and the honest fear in the eyes of people in the town grocery store. While picking up his weekly food stuffs Bill smiles and gives a kind greeting to a neighbor, both mask the awareness that her basket does not contain enough for her family of four. Her husband was working at a factory a couple of towns over when one company bought another company and there was a board meeting and many people in the area got the same memo. Unemployment benefits helped the job search for a while but when those expired there is just not enough money for the gas it takes to travel the many, many miles to hunt for a job where there is none. It would make more sense to car pool but in times like these everyone hopes they will be the one who drives back home a proud husband and father. Today she is not that wife and as Bill gives his well wishes to his neighbor he thinks of explosives and blood curdling fear compared to the chill of quiet despair. In his repair and maintenance work Bill tries to help where he can. He has cut what he charges for repairs and fixes whatever he can for free. Bill picks up one of the state's newspapers while at the hardware store picking up some welding supplies. He wishes he could get some more supplies just to help out the store owner but what he needs he gets and nothing more. Reading the paper the next morning over a cup of coffee and a beautiful sunrise Bill sees the Democrats have just won the House. Bill has heard Democrats talk some big talk about helping out folks in the country but that probably does not mean these country folks. As it turns out some of that talk made it all the way out to Bill's neck of the woods. Some of the benefits come back to those who lost them and Bill is happy to she his neighbor in the grocery store the next time will a little heavier basket. He pokes a little fun at the clerk, Joey, about the rack holding postcards and t-shirts next to the counter. Tourist actually have been seen in these parts again since the scenic route up the mountain was opened recently. Requests for equipment repairs have also picked up a little for Bill. He returns to charging his old rates. While picking up some iron rod from the hardware store the owner tells him there is a technical training school starting up in the old firehouse and gives him a flier. Next morning Bill is reading the brochure. The school is going to have one of those fancy tooling machines from Michigan. With the low cost plus a veteran's discount Bill figures that getting to play with that machine is worth the cost of admission. At the beginning of the month Bill shows up for the first day of class. An attractive female makes makes sure all his paperwork is in order and asks if he would like to take the basics of business class they also offer. With a smile she has him signed up before he can process what the question was. Sitting in class getting the safety lecture he rubs the scar tissue on his leg and wonders where this guy was a few years ago. Most of the people in the room he knows, some he doesn't. He asks Randy, guy from other side of East Creek, who the administrator is. He says Susan is some transplant from the north central east south or mid middle or something like that. She came down with the school and is renting a house near the center of town. Class goes very well and after a few classes some of his classmates talk Bill into opening a real shop and advertising to some of the larger farms in the area. Bill finds he has a knack for running a shop. He has an excellent talent pool with the school being right there. The business class helped plenty. A classmate opened a shop for a niche market regulator valve he designed himself and is selling nationwide. Bill makes it a point to thank the administrator every time he sees her. In a small town that is often but for some reason does not seem often enough. Bill still takes some of the two-three day classes mostly to keep current with the latest techniques but as chance would have it he has to keep checking to make sure all his school paperwork is in order. One day at the school bulletin board he notices there is a pick-up softball game as a fund raiser for the field agent who got hurt while raiding a meth lab a couple of weeks ago. Bill can identify with that. Randy suggests he brings the Susan as her car has been acting up lately. Susan begins to protest that there is nothing wrong with her car and Bill starts say how he can get a good deal from the mechanic when both stop short. Randy looks at the both of them with honest touch of disbelief then just shakes and returns to the workroom. While the game was not the world series it did generate a fair amount of talk the next day. Bill had to take some serious kidding, but it was well worth it.