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Source link: http://archive.mises.org/12671/should-we-be-upbeat-on-unemployment/

Should We Be Upbeat on Unemployment?

May 10, 2010 by

What the headlines and talking heads didn’t mention was that there are still 15.3 million people lying around on the couch watching Oprah and Ellen every day and a record 46 percent of these folks have been out of work for six months or longer. FULL ARTICLE by Doug French

{ 23 comments }

rshort May 10, 2010 at 8:07 am

ECRI’s Achuthan raised your point on CBS Friday evening calling it a depression for the long term unemployed.

greg May 10, 2010 at 8:28 am

Unemployment? I work in the construction industry where the world seem to stop. But in reality, it just shifted. Laid off construction workers are drawing unemployment and using their skills performing side jobs for cash. After a few side jobs, they realized they are taking home more cash than they did when they were working. The bottom line is you only have to earn half of what you made before to be ahead of the game. No federal or state taxes, no FICA or medicare taxes, no employer matching funds, no local taxes and no insurance fees.

I was discussing the growing layoffs with my daughter this weekend where her company is downsizing. Laid off workers are being hired as contract workers and they are making more than when they were directly employed by the company. Then when the end of the year comes, they will get to take advantage of countless write offs and keep more of the money they made. Basically, if you have your own business, you will have more cash at the end of the year and you only have to make about 60% of what you were paid before.

As taxes go up, this shift in employment will grow. And because of advances in technology and communication, you are going to see this move grow.

Walt D. May 10, 2010 at 3:54 pm

Very insightful.
It has long been known that the benefit of the second income in two income families, particularly those with young children is very marginal. It typically produces non-deductible expenses, such as child care, extra transportation and food costs, clothing costs, plus uncompensated commute time. Since the second income is subject to progressive taxes, the benefit can be very marginal unless both incomes are over $50,000. So, if one spouse loses a job, it is often better to sit home and collect unemployment rather than take a part-time interim job. In fact, most people who start collecting unemployment do not even start looking seriously until 3 or 4 weeks before the benefits are due to expire.

billwald May 10, 2010 at 11:58 am

There are two parallel economies. One for the working class and one for the investor class. As long as the asset gap between the workers and the investors is growing both economies are operating as planned.

Lynn Albro May 10, 2010 at 1:56 pm

You are so right. We are suffering with 19%+ unemployment in Central California, however, there are investors coming in and buying up the foreclosed homes for 50 cents on the dollar. Where are we headed from here?

Russ May 10, 2010 at 2:50 pm

This is what happens with planned economies, Bill. It takes workers educated in the secondary and tertiary effects of policies to understand that what helps them in the short term may hurts them in the middle or long term. But, unfortunately, most workers don’t have that education.

HL May 10, 2010 at 12:53 pm

What do you call a man without a job or currency? A bum. (Credit to Pulp Fiction)

We are a nation of bums. Nice. The end-goal of all social engineering is a fat man with a TV remote and bag or chips, and a fat woman with six kids by six different men.

Alex Barnes May 10, 2010 at 3:12 pm

My first jobs were all under the table when I started working for people other than my parents at the age of 14. My first “on-the-record” job was at a local Sonic at the age of 16. I’ve worked under-the-table several times since then. I knew many people growing up who collected a welfare check, food stamps, etc but worked under-the-table. When people see that the rich are obviously collecting a check, I think many poor and middle class people wonder why they shouldn’t get a hand out as well.

John May 10, 2010 at 5:43 pm

As to the current minimum wage being too high? In my first job, in 1966, I earned $1.25 an hour as a summertime janitor. Silver was about $1.29 an ounce, so I was being paid about one ounce of silver an hour (before taxes and SSI) Waht is the price of silver today? What is the minimum wage?

Wages are so low today because of government policy which has allowed the gutting of the manufacturing sector along with unbridled, illegal immigration. Our nation is being destroyed as a result of the collusion between big business and big government, which, once upon a time, was called fascism.

I am 61 and very conservative, but in my experience, big business will never be happy until we are all working for free. If we want to save our nation, I say close the borders and slap tariffs on all imported manufactured goods and services, and demand that in 5 years time all companies currently importing to America open plants here, or cease their imports. If we continue to listen to the “free-traders”, we will soon be bankrupt, destitute, starving, and slaves in our own land.

jake_nonphixion May 10, 2010 at 9:06 pm

Isolationism is certainly not the answer. Immigrants and trade are not why this nation is poor. If something can be made cheaper abroad, Americans benefit from the reduced cost of the product. The reason we don’t make anything here any more is exactly what this article is about. Our minimum wage is so high that no large company able to scale the costs of distribution would ever hire Americans to labor for 10 times the going wage overseas. This has nothing to do with the company being un-American or any other garbage like that, it is simply business.
The only argument against doing the exact opposite of what you suggested (opening the boarders completely and eliminating all tariffs) is that we live in a country with an intrusive interventionist government that promises entitlements to a population that forced into a ponzi scheme from birth. The only problem with illegal immigrants is that it’s not fair that people use government services they didn’t pay for like ambulances and fire fighters, but that doesn’t mean illegal immigration is the problem. It’s the entitlement system that should be eliminated. In a perfect world there would be no need for borders or lazy patriotism.

Mitchell Powell May 11, 2010 at 12:13 pm

And comparing the minimum wage to silver prices does not always accurately reflect whether the minimum wage is “high” or “low.” Just because the minimum wage only buys 1/3 of the silver it used to does not mean that the minimum wage has dropped to 1/3 of the purchasing power of the former wage. Indeed, in a world where the number of people grows while the amount of precious metals stays the same, the total amount of precious metal per hour of labor is to be expected to drop.

From 1970 to 1973, the minimum wage was $1.60/hour. During that period the amount of gold you could buy with an hour of minimum wage labor was cut by 63%. Would you say a minimum-wage floor-sweeper was only making 37% of what he’d been making three years earlier. Of course you wouldn’t, unless all that janitor bought was gold (in which case he’d be making less at work but would’ve made a killing on the rising price of gold).

Besides, even if we do accept that flawed statistical argument (and statistics are an easily manipulable thing people use to justify use of government force), perhaps the minimum wage was three times higher than it ought have been when you were a young fellow.

newson May 10, 2010 at 6:54 pm

mercantilism impoverishes by stunting division of labour across borders. learn your history, starting with the third reich, as you’ve got a feel for fascism.

free-traders like hong kong seem to rebut your claim.

Stephen Grossman May 10, 2010 at 10:44 pm

>I am…conservative, but in my experience, big business will never be happy until we are all working for free. If we want to save our nation,

Note the important similarities between conservatism and communism: the hatred of capitalism, the claim that self-interest requires destroying others and the collectivism, here, the nation, rather than individuals. And note the appeal to mindless experience, the conservative version of Marx’s basic appeal to economic intuitions.

>close the borders and slap tariffs on all imported manufactured goods and services, and demand that in 5 years time all companies currently importing to America open plants here, or cease their imports. If we continue to listen to the “free-traders”, we will soon be bankrupt, destitute, starving, and slaves in our own land.

This willfully ignorant, destructive fool needs to read Mises’ _Omnipotent Govt_ and _Socialism_. Or, at least, learn that the desire for international trade without British regulations was an important cause of the American Revolution. Tea Party! Hello! And that conservatives were the first opponents of the Constitution. And that poverty and an opposition to free trade existed in almost all societies in almost all of history. And thats not merely a coincidence. Conservatives were called the “stupid party” in the 19th century with good cause. Their hatred of the independent mind is despicable. Spiritually, they are not quite human.

Walt D. May 11, 2010 at 11:26 am

“Conservatives were called the “stupid party” ”
They can now be joined by Democrats, Republicans, and Liberals. To quote Forrest Gump’s mother -”Stupid is as stupid does”, or for Bush and Obama “Stultos enim fatua loquetur”.

ejs96 May 11, 2010 at 7:38 am

Thought you folks would appreciate this series of charts on U.S. unemployment, specifically the ones titled “Lots of new debt, not many new jobs” and “Median duration of unemployment since 1948″.

http://www.thumbcharts.com/series/us-unemployment-rate-1948-2010

billwald May 11, 2010 at 12:58 pm

The consensus of this thread seems to be that many people are paying their bills by working under the table. Except for barter, this is only possible because cash money exists. Less than 2% of the money in circulation is cash and half the cash is outside the country. (Checks and other bank paper are about 5%?) 90% is electronic transfer.

The way to cut unemployment cheaters and put people doing skilled labor . . . even illegal aliens, dopers, gamblers . . . on the books is to eliminate cash money and go 100% electronic transfer except change in denominations large enough to buy breakfast but to small that a attache case full could bribe a senator – say $5. How much taxable income would this add to the official system? Enough to bail out Social Security and Medicare?

j-dawg May 11, 2010 at 2:00 pm

Bill, sir, you are an idiot. Welcome to 1984 folks. What a great idea, have almost all money transaction being monitored by a government that is already looking for more tax money so that it can expand the reach of its fascist tentacles.

Walt D. May 11, 2010 at 8:23 pm

“How much taxable income would this add to the official system?
This does not matter. For every dollar Congress anticipates receiving, they spend $1.25 to $2.00. It has gotten worse recently. Incidentally, there is only one number to look at – tax receipts – very difficult to fudge and a good indicator of unemployment and economic activity.

Peter Surda May 12, 2010 at 4:26 am

Dear Billwald,

it is possible that foreing accounts or commodity money (e.g. gold) would be substituted for cash. Opening a dollar account outside of US is no big deal. As long as both payer and payee do this, and the company processing the payment is also outside of US, IRS has no legal means to that extract that information from either the bank or the processor. The processing company can even allow you to put transactions to different accounts based on the location of the account of the payer to facilitate tax evasion. The only way to avoid this, of course, is if the marginal income tax rate is lower than the fees for the account and payment processing.

In other words, just another attempt at social engineering that will fail to reach its objective. The proper way to “cut unemployment cheaters” is of course to eliminate both the minimum wage and unemployment benefits.

P.M.Lawrence May 14, 2010 at 5:19 am

‘The proper way to “cut unemployment cheaters” is of course to eliminate both the minimum wage and unemployment benefits’.

Actually, the best thing would be to change the way minimum wages are implemented from an employment harming, mandated approach to a tax break subsidy approach, much like that suggested by Professor Kim Swales of the University of Strathclyde and his colleagues and that suggested by Nobel winner Professor Edmund S. Phelps, McVickar Professor of Political Economy at Columbia University. I describe a variant for Australia here, which gives more detail.

Joseph Pierre May 11, 2010 at 3:06 pm

The master slave relationship fostered on the working and middle class by the over-privileged has to come to an end before we’re able to deal with the mess it has created! What people want is an equal opportunity, for instance implementation of the Abecedarian Childrens Experiment recommendations, to do so would save the families and save the costlier expense of poverties overall cost.

Joseph Pierre May 11, 2010 at 3:16 pm

The master slave relationship fostered on the working and middle class by the over-privileged has to come to an end before we’re able to deal with the mess it has created! What people want is an equal opportunity, for instance implementation of the Abecedarian Childrens Experiment recommendations, to do so would save the families and save the costlier expense of poverties overall cost. In todays climate there is no goodwill coming from above in practical applications of relevant needs.

PDH5204 May 27, 2010 at 9:34 am

“In fact, most people who start collecting unemployment do not even start looking seriously until 3 or 4 weeks before the benefits are due to expire.”

Source? There isn’t one. So, please, can you and some others here stop making up “facts” as you go along. Never mind, since before I get to my next point, let me note for the record that the libertarian position is, facts, who needs facts? Which brings me to my next point:

“This willfully ignorant, destructive fool needs to read Mises’ _Omnipotent Govt_ and _Socialism_.”

Did you mean to say that Mises was a willfully ignorant, destructive fool? No one in their right mind trusts an unregulated capitalism just as no one in their right mind trusts an unregulated socialism. And by the way, moron, if you want unregulated capitalism, go to any number of third world countries. They have laws, sure, but the elite and powers that be simply ignore them. The rest, the great unwashed masses, live in a poverty that cannot be described but only experienced. One would otherwise tend to think, well, the rest of our spiritually deprived, read, not quite human humanity would tend to think that since libertarianism has never been practiced anywhere, at any time, in human history, that it will never ever be practiced by humans. Again, there’s a reason for that. No one trusts either an unregulated capitalism or an unregulated socialism. The closet we get to either is America during the last thirty years and the former USSR. Both are colossal failures. Excuse me, let me correct myself. You can add to an unregulated capitalism, Russia after the USSR. That worked out well, yes? What with inflation running at 2000+% and the country more or less looted by the unscrupulous souls who took more wealth than you can imagine elsewhere.

And here, Edmund Burke, a conservative:

“Society, for Burke, is neither a collection of loosely related individuals nor a mechanism with interchangeable parts. It is a living organism, and anything that affects the well being of any part of it will affect the whole. It is, therefore, he insists, “with infinite caution that any man ought to venture on pulling down an edifice which has answered in any tolerable degree for ages the common purpose of society.”

There are two problems of which Burke, and conservatives after him, have been acutely aware. The first is that of unintended consequences—that because of the complexity and interconnectedness of things, in initiating change on an ambitious scale, more is almost invariably set in motion than the initiator had in mind, and the result may be quite different from the intended one. Thus, in Burke’s words, “[V]ery plausible schemes with very pleasing commencements have often shameful and lamentable consequences.” To stop elephants from being killed, the ivory trade was banned. This made ivory scarce. Prices went up, and the rewards for poaching became greater. More people engaged in it, and more elephants were killed than before the ban was introduced.”

And that, moron, is why we are conservative. If it has stood the test of time, what with the law of unintended consequences, tread lightly re any change, since you cannot possibly anticipate the exact result. That’s what it means to be conservative. But don’t let your dehumanizing screed get in the way of any rational thought on your part.

Lastly:

“The proper way to “cut unemployment cheaters” is of course to eliminate both the minimum wage and unemployment benefits.”

That might be hard to do, Moron No. 2. Your employer pays an unemployment tax based on the tax rate and your salary. If that wasn’t collected, then the worker would presumably have been paid more. So are you advocating that the government return to the workers all the money that would have been paid as wage but was instead collected as unemployment tax for unemployment insurance purposes? If so, then good, as that way the unemployed won’t have to look for work until they feel like doing so. That sounds “libertarian”, yes? It’s otherwise called unemployment insurance for a reason, dumbass, and now that the risk of loss has come to fruition, leave it to heartless libertarian you to want to cheat your fellow humans of what they have paid and earned via their labor. But then again, to borrow from Lincoln, the perfect liberty that you’ve always been looking for is to make slaves of other humans, yes? See Moron No. 1′s screed re not quite spiritually human. And so fit to make slaves. See, told you so.

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