TRR: Amazing White House Discovery: Unemployment Creates Jobs

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President Obama has lately been pushing a number of policies that he says will create jobs, including extending unemployment benefits. This is puzzling, since new benefits obviously will not create jobs for unemployed people, who after all are the ones who need work. But White House Press Secretary Jay Carney explained Thursday that paying out unemployment checks “is one of the most direct ways to infuse money directly into the economy because people who are unemployed and obviously aren’t running a paycheck are going to spend the money that they get. They’re not going to save it, they’re going to spend it.” True, they probably will spend the money, on their mortgages, on food, and other necessary expenses. But Mr. Carney attributed miraculous qualities to these government handouts, saying “every place that, that money is spent has added business and that creates growth and income for businesses that leads them to decisions about jobs, more hiring.” By that logic the whole country should go on unemployment. 

Mr. Obama’s faith in the power of government is not surprising, but this argument is absurd. It ignores the fact that unemployment benefits are paid in place of lost wages. They are smaller than the paychecks they replaced thus are not a net plus for the economy. They do not “create growth” or jobs, but at best do what they were intended to do, sustain workers at livable but substantially reduced income levels while they look for jobs. Yes they allow the government to pour money into the economy, but these days that means piling on more debt to the red ink that is preventing economic growth in the first place. 

Extending unemployment benefits keeps unemployment rates higher because it removes incentives to seek work. The current recession has seen the deepest, longest job losses of any since the Great Depression, in part because Congress kept extending the length of time workers could draw benefits. And even if this does mean that people will continue to pay their bills and buy groceries and other necessaries, it is not the basis for economic growth. In essence the White House wants to borrow money to pay people not to work, and declare it a victory when they spend the cash just to survive. Mr. Obama apparently believes this is how jobs are created. It is no wonder why the country is facing such desperate economic times. But at least the White House is happy so many people are out of jobs.

Another unemployed person boosting the economy

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About the Author

James S. Robbins

James S. Robbins, Ph.D., former Senior Editorial Writer for Foreign Affairs, was formerly professor of international relations at the National Defense University, associate professor of international relations at the U.S. Marine Corps Command and Staff College and special assistant in the Office of the Secretary of Defense under Donald Rumsfeld. Dr. Robbins is author of the recently released "This Time ...

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