Why A High Unemployment Rate Might Help Some Jobless
The following post was written by Quinton Chandler.
Americans are quick to cite the pros of capitalism but, like any kind of economic system, free markets have their ugly monsters hidden from public view. One such monster currently haunts more than 6% of Oklahoma residents…unemployment.
Last week, the Oklahoma Employment Security Commission released a report on the state’s labor market statistics for December 2011. December’s numbers show more than 100,000 Oklahomans are out of work and O.E.S.C. paid nearly 20,000 claims on state and federal unemployment benefits. If not for these benefits, bills would have gone unpaid and refrigerators left empty, making already grim circumstances, hopeless. 71 year old Joseph Morris shares his story.
“I’ve been unemployed ever since November 2010. I was a welder and I was an equipment operator. And for the money I was making doing that kind of work, you just aren’t hardly going to find that any more, 28.85 an hour, that’s out on these jobs you’re going to find now.”
Early last year unemployed Oklahomans filing for first time benefits, could receive up to twenty-six weeks of state aid. Forty-seven weeks of federal aid given out in three tiers followed. Eligibility for each tier ties to the state unemployment rate.
“Now we previously offered the third tier of benefits but, they were based on a trigger and the trigger was the three month average unemployment rate for the state, as long as that was above six percent we could offer the tier three benefits,” said John Carpenter, Public Information Officer at the O.E.S.C.
“But back in July of last year the state average fell below six percent so the program triggered off.”
After July of last year, if you went through your first and second tiers you would not get any more unemployment checks. Then, the state’s average unemployment rate clocked in at 6.1% in November, an ironic windfall. Coming just in time for a joyful Morris, who was about to run out of tier two benefits.
“And now, you can go 1, 2, and 3 and there’s a possibility that they might even go farther than that, I don’t know yet. But I’ll tell you one thing it’s a big help to the country and to the people that aren’t working.”
There is no doubt unemployment benefits provide a safety net for anyone out of work; but are they good for the country? That question has been a topic of debate among economists since The Great Depression.
“The idea is for unemployed people to still have some money to spend, spending does stimulate the economy in the short run,” said Oklahoma State University Economics Department Chair Jim Fain. “And so there’s quite a bit of support for the idea that short run unemployment benefits are beneficial for the economy.”
On the other side of the argument are those who say long-term unemployment benefits provide a disincentive to find work. They fear America is creating a dependency on unemployment benefits.
“In European countries the unemployment benefits are much higher and their unemployment rate is much higher and so there’s some thought that if you pay people to remain unemployed then their less likely to search for jobs or they’ll search less intensively for jobs.”
Wendell Woodard disagrees.
“I don’t know what to say, it’s just difficult there’s nothing in the comparable pay range, there’s nothing in the job market in the area. I’m going to have to pretty much move out to Oklahoma City or Tulsa to find a job.”
The promise of free aid has not ended Woodard’s search for work, but that might not be true for everyone.