Rand Paul says he cares about the unemployed.

He says it’s “our moral oblig­a­tion as a society to take care of those who cannot take care of them­selves.” That “no one asserts that the problem [of long-​​term unem­ploy­ment] is people not wanting to work.” Rather “the problem is not in the minds of the unem­ployed, but in the minds of employers.”

So why does he want to end unem­ploy­ment ben­e­fits for people who have been out of work for 6 months or longer? Well, Paul cites my work on long-​​term unem­ploy­ment as a justification—which sur­prised me, because it implies the oppo­site of what he says it does.

Now, we clearly have a long-​​term unem­ploy­ment problem. The ques­tion is why. Paul says it’s all about incen­tives. He thinks extending unem­ploy­ment ben­e­fits does a “dis­ser­vice” to the unem­ployed by encour­aging them to stay unem­ployed for too long. And as a “big-​​hearted” member of a party that cares about the job­less, he wants to pro­tect them from making such mistakes—by cut­ting their ben­e­fits, of course.

But Paul mis­reads my work to try to back up his argu­ment. He says my paper, which shows that com­pa­nies don’t want to hire people who have been unem­ployed for more than 6 months, proves his point about long-​​term ben­e­fits (though he con­fuses it with another paper I authored with William Dickens). How does he figure this? Well, Paul thinks that “extending long-​​term ben­e­fits will only hurt the chances of the unem­ployed in the job market,” because longer ben­e­fits will make them choose to stay unem­ployed longer—at which point firms won’t hire them. But just because com­pa­nies dis­crim­i­nate against the long-​​term unem­ployed doesn’t mean long-​​term ben­e­fits are to blame. Paul might know that if he read beyond the first line of my paper’s abstract.

Our long-​​term unem­ploy­ment trap has nothing to do with long-​​term ben­e­fits. Indeed, in a pre­vious paper for the Fed­eral Reserve Bank of Boston, I decom­posed job open­ings for people who are and aren’t eli­gible for ben­e­fits. I found that up to half the increase in the unem­ploy­ment rate rel­a­tive to job open­ings was explained by job leavers, new entrants and re-entrants—people who can’t col­lect UI benefits.

There is no evi­dence in my study, and almost no evi­dence else­where, that cut­ting unem­ploy­ment insur­ance would increase employ­ment much at all. There is some evi­dence that it would lower the unem­ploy­ment rate, but only because people would give up looking for work, and no longer count as unem­ployed. So elim­i­nating ben­e­fits for 4.1 mil­lion long-​​term unem­ployed people might hide some of the prob­lems with our labor market. But it would do nothing to cure them. It would only cut off a vital life­line for the long-​​term unem­ployed and their families.

According to Paul, “caring about the unem­ployed doesn’t help unless it is linked to good policy.” Of course. But good policy requires more than a cur­sory or selec­tive reading of the research on unem­ploy­ment. A careful reading reveals we can be both hard-​​headed and warm-​​hearted in this hol­iday season.

 

RAND GHAYAD is expecting to receive his Ph.D. in Eco­nomics from North­eastern Uni­ver­sity this Spring and is cur­rently looking for a job. His web­page is www​.randghayad​.com

Read the article at The Atlantic →