If there’s any question that the Obama Administration is coming
up dry with new ideas for job creation, Agriculture Secretary Tom
Vilsack all but confirmed it last week. In an interview, Vilsack
bragged that one in seven Americans are now on food stamps. Why
brag about such a thing? Because, said Vilsack, every dollar from
the food stamps program “generates $1.84 in the economy in terms of
economic activity.… It’s the most direct stimulus you can get in
the economy during these tough times.”
Seriously, this is what passes for economic thinking in
the Obama Administration right now. By Vilsack’s logic, if food
stamps are such a boon to the economy, then why not put all
Americans on food stamps? But it’s this same faulty logic which
seems to be governing the White House’s plans for job creation.
Even after extending unemployment insurance to an unprecedented 99
weeks two years ago, the White House seems prepared to fight any
effort to eliminate the extension.
Consider the explanation from White House Press Secretary
Jay Carney on the economic “stimulus” of extending unemployment
insurance: “It is one of the most direct ways to infuse money into
the economy because people who are unemployed and obviously aren’t
earning a paycheck are going to spend the money that they get.
They’re not going to save it; they’re going to spend
it.”
The White House should know better, especially given what
we already know about extending unemployment benefits. According to
an analysis by the Federal Reserve Bank of San Francisco, extending
unemployment benefits to 99 weeks increased the U.S. jobless rate
as much as 0.8 percentage points. In fact, note the Fed economists,
the long-term unemployed now account for nearly half of all people
out of work.
This shouldn’t come as any surprise. I saw this firsthand
when trying to hire a nanny in the Detroit area. One
otherwise-qualified nanny said she didn’t want to start until her
unemployment benefits ran out. In the context of some 13.9 million
out-of-work Americans collecting up to two years of unemployment,
we must wonder if our well-intentioned social programs are
backfiring.
Losing a job is definitely one of the toughest setbacks in
life, and certainly unemployment insurance helps soften the blow.
But when unemployment compensation of such length actually
discourages unemployed Americans from finding jobs, then it’s time
to question the benefits of yet another extension. Moreover, at a
time when federal and state budgets are so deep in the red, we
can’t continue to perpetually fund a program that is now costing
federal and state governments some $129.5 billion
annually.
We must look for an alternative that might actually lead
to job creation. One idea is to provide a shorter duration of
unemployment insurance and then require those receiving these
checks to volunteer at a non-profit for 20 hours a week. Whether it
is a church, local government, or a charity, in these tough
financial times when charitable giving is down, these non-profits
will appreciate the support, as will the community they
serve.
Just as important, the unemployed job seeker will benefit
also. He or she can gain skills, contacts, references and maybe
even a full time job. Moreover, studies have documented the
psychological damage one endures while unemployed for an extended
period. Sometimes, without meaningful work, a person simply gives
up. By tying their benefits to performing meaningful work, we can
help lift the person’s self-esteem and confidence, which will keep
them motivated to find a regular job.
A program like this doesn’t require a new bureaucracy. It
simply requires a non-profit official to certify the person’s
weekly 20 hours to the unemployment office, which is already
equipped to certify when someone is eligible for
benefits.
If the government is giving away taxpayer money for those
who deserve it only because they lost their job, then we should
have no problem attaching some strings. Tough times call for trying
something new. But the Obama Administration seems willing to ignore
the mounting evidence that extending unemployment insurance is only
hurting job creation. As the old adage goes, if we try more of the
same, we’ll get more of the same.
Our choice doesn’t have to be the stark choices offered by
extremists in either party (pay or not pay two years unemployment).
This “volunteering” third option is one which will help our nation,
the Treasury, and the unemployed.
