Rethinking 99 weeks of unemployment

Teaching our three-day intensive course in RDBMS and SQL development at MIT made me reflect on the wisdom of the government using tax dollars to pay people for 99 weeks (two years!) to stay home and play Xbox or watch TV while waiting for employers to return their calls. The standard 26 weeks of unemployment makes sense to me. People paid for the insurance with wage deductions and it might take 26 weeks to move to a new city or state, work one’s network of friends and relatives, etc. But the subsequent 1.5 years don’t make sense to me given what a human ought to be able to learn in that period of time.

In three days we took people, admittedly many of them very bright, from zero knowledge of RDBMS to basic competency in SQL programming. They were also able to modify, recompile, and test Android applications that pull information from a Web-based RDBMS. Many of the students had very limited programming experience and many were not MIT-affiliated, so it is not as though we took MIT computer nerds and made them slightly more nerdy.

Let’s try to come up a list of things that a person, effectively taught, could do in 99 weeks. Here’s a start:

  • earn most or all of a bachelor’s degree if done at an efficient school such as University of Phoenix where courses are self-paced and/or in session all year rather than the lazy half-the-year calendar of a legacy university
  • earn an MBA (1 year at a modern school; 2 years at a legacy school)
  • become a competent video editor in Final Cut or Adobe Premiere (two weeks?)
  • become a competent photo editor in Adobe Photoshop or The Gimp (two weeks?)
  • develop reasonably fluency in a foreign language, even without an instructor, using tools such as RosettaStone (one year, possibly including a trip to Guatemala or China or wherever)
  • start and finish an aviation maintenance degree and FAA certification (typically about 1.5 years)
  • learn heavy equipment operation
  • complete almost any trade school, e.g., plumbing or electrician
  • go from zero computer knowledge to being a Microsoft Certified Systems Engineer or a Cisco network engineer

It seems strange to pay someone for 99 weeks and hope that somehow the employers that didn’t want them when they were fresh out of work would somehow want them after two years of idleness.

What about the following modifications to the system:

  • for people who live in states with an unemployment rate higher than average (see http://www.bls.gov/web/laus/laumstrk.htm for the rates), offer a lump sum at the end of 12 weeks to assist the person in moving to a state with a lower-than-average rate
  • for people who’ve been unemployed for 12 weeks, simply pay for a year of education in programs with proven records of skills-building (I guess you measure by how many finished and were able to get jobs)

I have heard that there are various government training subsidies available, but none seem to be as well funded as the river of money that is going into the 99-weeks-of-Xbox system.

What’s wrong with my thinking? Is the 99-weeks-of-Xbox system that Congress created more sensible than it seems?

97 Comments

  1. Josh Volchko

    January 27, 2011 @ 5:12 pm

    1

    A number of friends and acquaintances are getting training to be diesel technicians and the like, and from all accounts, will be snapped right up for a job in the field. They’re all getting certified in around two years for training that offers more, and pays more, in a far shorter time span than it did for me to get a degree from a typical University (with two minors throw in because there is so much wasted time in the normal class schedule) in computer information sciences. The course listing for a CIS degree from Clarion University would probably make you cry in your sleep, Phil. At least when I went to school, the most marketable classes, database and networking, were *electives*.

    This does seems to lend decent credibility to your theory that it really doesn’t (and shouldn’t) take four years at a school to earn a degree or skill set that would make you marketable to someone. I honestly can’t imagine, if most people from my current workplace were found unemployed, that they could current get hired anywhere – except maybe ace COBOL programmer getting picked up to maintain legacy systems, but who are also youngish, with good people skills, eager to learn more – without picking up new training, and quickly. Two years off the job with nothing to show for it but rusty MVS/TSO/REXX/COBOL/VSAM skills isn’t going to help (nevermind the fact that databases and SQL seriously seem to confuse half this place). There most assuredly would be difficulties with the unemployment system indirectly hampering efforts, and just dealing with day-to-day issues, and experience thing does tend to help, but, like most people here seem to be saying, it’s better than playing XBox.

  2. philg

    January 27, 2011 @ 5:18 pm

    2

    Josh: Thanks for the diesel mechanic idea. A person who can repair an engine is probably a person who will always be able to earn his or her next meal. Especially as the average American grows poorer there will be more demand for people who can keep older machines running.

  3. D

    January 27, 2011 @ 5:21 pm

    3

    http://science.dodlive.mil/2010/01/26/adults-benefit-from-playing-video-games-podcast/

    99 weeks of Xboxing may be a cheap way to boost your intelligence…

  4. ZachPruckowski

    January 27, 2011 @ 6:01 pm

    4

    Among “all college grads” the unemployment is low, but for people just graduating from college and just entering their fields, it’s 7.5-8%, which is better than the overall rate, but still far from fully employed. I’d argue this is a better metric to compare someone receiving training and switching fields to because they’re entering their new fields with no experience – 10 years as a logger doesn’t give you much of an edge when applying for a Systems Administration job.

    http://www.npr.org/templates/story/story.php?storyId=127092817

  5. philg

    January 27, 2011 @ 6:05 pm

    5

    Zach: Thanks for that data. http://www.bls.gov/news.release/hsgec.nr0.htm says that in 2009 the “unemployment rate for recent high school graduates not
    enrolled in school was 35.0 percent”.

  6. John

    January 27, 2011 @ 7:12 pm

    6

    Some thinking from fly-over country:

    “move to a state with low unemployment” #1- America has a high divorce. When children are involved, the custodial parent needs to live within 100 miles of the other parent (in the one example I’m familiar with). Not sure what %age of unemployed this would affect, but suspect millions.

    #2 – from reading blogs, it sounds quite difficult for a person to land a job in another state. Maybe the job requirements state “local applicants only” and want the first interview in-person within 48 hours of contact. Sure moving makes sense for a higher value job, but remember median male income is down to ~$29,000, does it make sense to uproot a family for a $14/hr job?

    #3 – looks like most of the states with low unemployment are also low population. Realistically, how many of the 5 million in CA can move to ND and still find a job?

    You mention plumbing, heavy equipment and electrician. All great fields, if there are jobs. But there is no real reason for America to build another house until 2015+. These people are sitting idle in most states, I hear. One electrician I hear of lives in Florida and the closest work he can find is New Orleans.

    Cyclical vs structural – a popular opinion on many of the blogs I follow is that the current recession isn’t cyclical, but structural. The US economy just doesn’t need as many workers now, or in the future. But what will we do with the excess?

    The good news is that enough people in Michigan followed your advice, our population declined in the last census.

  7. Attikus Robinson

    January 27, 2011 @ 7:20 pm

    7

    @philg

    Is it true that community colleges are ineffective at creating attractive employees? This article suggests that community college graduates’ starting salaries are higher than their private university counterparts:

    http://www.dailyorange.com/news/starting-salaries-for-community-college-students-higher-than-those-of-private-university-students-1.1904047

    The article also suggests that community colleges work closely with employers to figure out what they need, so the higher starting salaries make sense.

  8. philg

    January 27, 2011 @ 7:40 pm

    8

    Attikus: I didn’t mean to suggest that community colleges were worse than four-year colleges, only that they are part of an established system (K-12, 2-year colleges, 4-year colleges, grad schools) that has left a substantial fraction of young folks without enough skills to be useful in the 21st Century economy.

    John: Your electrician friend can’t find work without traveling to New Orleans? That doesn’t sound like a crisis. Humans have migrated for work for millennia. Divorced parents might have to separate geographically for both to have jobs? That doesn’t surprise me. I believe that custody arrangements can be reviewed as necessary. I’m not sure who supposedly guaranteed Americans that they would always be able to find work close to their existing house and in the same field as their last job.

    The idea that the U.S. economy doesn’t “need” more workers strikes me as odd. Worldwide, more jobs have been created in the last 10 years than at any other time in human history. The U.S. did not add any private sector jobs during this period, but that isn’t because the world economy doesn’t demand more workers. It simply doesn’t demand more workers in our skill, tax, health care, and educational achievement environment.

    [See ftp://ftp.bls.gov/pub/suppl/empsit.compaes.txt for how total private sector employment was 111.6 million Americans in December 2000 and 107.1 million in December 2009 (looks as though the December 2010 comparable number is 108.5 million, according to http://www.bls.gov/news.release/empsit.t17.htm ).]

  9. Attikus Robinson

    January 27, 2011 @ 8:04 pm

    9

    @Philg

    Is it true that the established system is leaves young folks without useful skills? The unemployment rate for college systems is only 4.6% (source: http://www.realonlinedegrees.com/more-education-means-less-unemployment-get-a-college-degree_2011-01-25/ ).

    I’m not sure if a 0% unemployment rate is realistic.

    IMO, the main problem with the existing system is the cost involved. With skyrocketing tuitions (at least at 4 year institutions), it’s getting very hard to justify it. And god help you if you find out you don’t like the thing you’re doing after spending 4 years and $100,000+ becoming certified in it.

  10. philg

    January 27, 2011 @ 9:15 pm

    10

    Attikus: Not all young people graduate from college. Our educational system does not train to proficiency, but rather accepts that a percentage of high school students won’t finish, a percentage of college students won’t finish, etc. Basically anyone who doesn’t learn well in a sit-still-while-someone-lectures environment is likely to drop out of the system prior to getting a bachelor’s degree.

  11. Ceph

    January 27, 2011 @ 10:39 pm

    11

    Thanks for helping the world out a bit philg. I was in a pharmaceutical company that terminated manufacturing ops and lost my job as a scientist. While on unemployment I taught myself some c#, HTML, objective-c and am now finishing up a Java cert. I also started a small software business to stay gainfully employed. Its frustrating at times but I have learned so much and it’s a lot of fun.

    I see a lot of age 40+ people in school who lost thier jobs as our manufacturing moves oversees. It would be interesting to know the percentages of the people who go back to school or go indie vs stagnate.

  12. AnonChemX

    January 27, 2011 @ 11:00 pm

    12

    @Ceph

    I’m a grad student (PhD) in chemistry that thought an industry job in pharma would be a good job to aim for. However, it seems that I was wrong, almost no one I know has gotten any jobs beyond post-docs. As someone who left pharma, would you recommend dropping the PhD now? It really seems like such a hard road anymore. However, because I have been in school for so long, it’s really hard to see what else I could even do.

  13. Rachel Blum

    January 28, 2011 @ 1:27 am

    13

    @philg: Yes, it’s a rather difficult situation to get your head around.

    Yes, the losses have already happened – but that doesn’t help you much. First, you need to be able to sell your house *at all* – and depending on the market, that’s still a tough nut to crack.

    Second, when you do sell, you do so at a *steep* loss. Which quite likely means you need to declare bankruptcy. If, on the other hand, you try to sit things out, it takes a *lot* of time to reach and go through the whole foreclosure thing, and you can do a lot to stall it even further.

    In other words, you have the choice between a huge, immediate, and certain loss, or a gradual and potentially much lower loss. And faced with that choice, of course people go with the latter one. Basically, they are gambling that their reserves will last them longer than the economic downturn.

    That doesn’t mean you’re stuck for 5 or 10 years, or that you’ll never move again – but *right now* it’s a rather disastrous economic decision to make.

    “Just go and learn something” is an overly simplistic answer to a rather complex problem.

  14. Friedrich

    January 28, 2011 @ 2:38 am

    14

    @ceph: “I see a lot of age 40+ people in school who lost thier jobs as our manufacturing moves oversees.”

    And I see this as the biggest problem of the US but also Germany. If you give up on manufacturing you loose much more then just this “manufacterer”. Mechanics, Electricians etc etc will be gone also. And with allways cheaper production the “repairing” jobs will go also. Agreed the jobs in factories are mostly terrible, but without it you loose a whole lot of abilities.

    Outsourcing is not the solution….

  15. Attikus Robinson

    January 28, 2011 @ 5:03 am

    15

    @AnonChemX

    A couple options are to go for the MBA or JD and combine that with your PhD. I’ve had friends who’ve done the JD combo with some success (though they only had BS/MS degrees). It’s a great combo that a lot of biopharm companies are interested in.

    Another option is to work for a management consulting firm like McKinsey or Bain. These guys just look for brains, regardless of background.

  16. Karla

    January 28, 2011 @ 6:10 am

    16

    What about freelancers who get no benefits?

  17. philg

    January 28, 2011 @ 10:03 am

    17

    Rachel: Thanks for the response. I still think it would be more sensible for an underwater-on-the-mortgage jobless person in a jobless region to mail the keys to the mortgage company and move to where the jobs are.

    Karla: You raise a good point. A freelancer should not be entitled to the first 26 weeks of unemployment checks because he or she did not make insurance payments. However, the 73 additional weeks that Congress is funding from the public trough should, in fairness, be available to freelancers as well. I.e., anyone who, within the preceding two years, filed an income tax return showing W2 or 1099 income, but who no longer has that income, should be getting checks.

    [I know that this sounds unfair to people who never had any income to begin with. Why are they left out? Let’s not confuse unemployment payments with poverty relief. By definition people getting unemployment checks had standard W2 jobs fairly recently and/or are likely to be married to a current W2 worker. So they are not among America’s poorest residents, many of whom have not had a W2 job in a decade or more and live in communities where they aren’t likely to marry a W2 worker. Congress’s 99-weeks-of-Xbox program cannot be considered an anti-poverty measure.]

  18. RussellUResti

    January 28, 2011 @ 11:48 am

    18

    I agree that the 99 weeks of unemployment payments is a bit silly. However, your proposed solutions miss the mark, I believe.

    “for people who live in states with an unemployment rate higher than average (see http://www.bls.gov/web/laus/laumstrk.htm for the rates), offer a lump sum at the end of 12 weeks to assist the person in moving to a state with a lower-than-average rate”

    Wouldn’t this oversaturate the markets in those places with lower unemployment? I’m not sure you’d actually be giving people jobs, you’d just be distributing the unemployment.

    “for people who’ve been unemployed for 12 weeks, simply pay for a year of education in programs with proven records of skills-building (I guess you measure by how many finished and were able to get jobs)”

    Again, you’d just be saturating the market. Say jobs in underwater basket weaving were in demands, and you send a bunch of people to schools for degrees. Sure, the first ones out would probably get jobs, but eventually the jobs would run out and those graduating still wouldn’t be able to find work.

    Not to mention that employers in those areas (for the moving scenario) or markets (for the education scenario) would see a lot of competition arise for their job offerings, which would end up with them offering less pay, less benefits, and worse working conditions (if a job is in demand, you can get away with offering worse compensation).

    We’re getting to a point where just finding jobs in the existing marketplace isn’t going to cut it anymore — international communication is too easy and the education levels in emerging economies are too high not to send jobs to those places. Too many jobs are being sent out — this is not necessarily a bad thing, I’m not against outsourcing, there are just consequences. We’re to the point where we need more innovation and entrepreneurs. We need an entirely new system of work and employment, not the Industrial Revolution model we have now that was built around the focus of filling the production plants to the brim with workers who were just educated and capable enough not to cause themselves serious injury.

  19. philg

    January 28, 2011 @ 12:11 pm

    19

    Russell: You’re arguing that people shouldn’t get educated because they would all concentrate into one field and saturate the market for people with training in that field? If that were true, shouldn’t we tear down the existing higher-ed system? If all of the students see that the best-paying jobs (including pension and other benefits) are with the police and prisons, everyone will major in criminology and we’ll have millions more criminology graduates than employers demand.

    Circling back to my original posting, my point was to ask whether we’d be better off as a society and as an economy with working-age folks who’d had a mid-career year or two of extra education rather than a year or two of staying home. It seems obvious to me that a better-educated society is a wealthier society, but I’m not sure if there are good data to prove it. Certainly there are Arab countries that are very wealthy and yet have among the world’s lowest literacy rates, but we can explain that by pointing to the oil wells (located and drilled by foreign experts). On the other hand, we have Japan where there are no natural resources, but they are very highly skilled and wealth (see http://www.telegraph.co.uk/finance/globalbusiness/8287339/Warning-shot-for-America-and-Europe-as-SandP-downgrades-Japan.html , however, for how the Japanese government’s 15-year stimulus spending spree may yet prove to be a problem).

  20. RussellUResti

    January 28, 2011 @ 12:34 pm

    20

    philg: I’m not arguing that it would saturate the market for those already in the field, I’m saying even those that you would be sending to the field to get educated would not be able to find work — in which case you’ve wasted a year of their time and put them further in debt with still no employment.

    I actually have a friend who has been unemployed for over a year now. He went back to school to finish his Bachelor’s, thinking, like you’re implying, that better education would mean work. Guess what, finished the degree several months ago and still hasn’t been able to find employment, and he’s in a state with an average or below average unemployment rate. More education doesn’t always matter in a society and job market already saturated with educated people who can’t find work.

    I’m not arguing that they shouldn’t get educated, I’m arguing that sending them all into a handful of currently in-demand degree programs is short-sighted and may end up doing more harm than good.

    As for tearing down the existing higher education system, I think we should. I think our entire educational system needs to be reformed, actually. But just looking at higher education, students are paying ever-increasing tuition costs, going into ever-increasing debt, to graduate and find less jobs than ever before. And the jobs they do find are paying less than ever before because there is such a large pool of people with college degrees to pull from. The 4 year degree has less and less value now, they’re too commonplace. As you stated, look at Japan for an example of a country that has a ton of educated people who can’t find steady work; over 40% of their college graduates are graduating without jobs to go into. Obviously, JUST education isn’t a solution.

  21. philg

    January 28, 2011 @ 12:40 pm

    21

    Russell: Thanks for the clarification that “JUST education isn’t a solution.” Looking back at http://philip.greenspun.com/politics/economic-recovery (from November 2008), I had improved education as one of 8 main points (and to those 8 points I probably should have added something about http://philip.greenspun.com/politics/health-care-reform , since the fact that U.S. health care costs for a small family are now higher than the median worker’s after-tax income is almost certainly an obstacle).

    The U.S. is apparently not the first choice when business people look for places to invest and hire and we need to change a bunch of things. My point was that 99-weeks-of-Xbox does not move us in the right direction.

  22. Paul A. Houle

    January 28, 2011 @ 1:21 pm

    22

    @philg,

    your explanation just proves my point. You can’t count a pilot project that a few people do on nights and weekend as a scalable model. If an activity doesn’t pay a competitive or at the very least a living wage, the people involved are going to burn out.

    Note that “television” isn’t the only thing people do on nights and weekends; for one thing, some of us need a little physical activity so we can spend 50+ hours a week as keyboard athletes. Some us also invest our time so that there’s going to be a future generation. (Note that Silicon Valley and New York City can only exist because people are raising children in other places)

    As for moving, you’re right to qualify that this is a strategy that has “worked in the past.” On a global scale we’ve seen that emigration is a strategy for managing the demographic transition: places where people are having “too many” children export to places where people are having “too few”. You might think of it as an example of comparative advantage.

    Half of my wife’s extended family immigrated in masse from Italy to escape WWII and the collectivization of agriculture to the area around Binghamton, NY and quite interestingly, none of them have left… The men either work in well-paying construction (often unionized) or in family owned restaurants. The women are schoolteachers (unionized) or own hairdressing businesses. They’ve created their own ethnic blue-collar heaven which is reasonable prosperous and that has a number of non-monetary benefits (you don’t have to pay so much for day care when your grandparents can watch your kids.)

    Of course, this isn’t a model for everybody; it’s the case of an ethnic group that is looking out for it’s own. On the other hand, the children of traditionally catholic European ethnic groups tend to discover that academia is place where certain [other] ethnic groups are looking out for themselves too and could find themselves quite mystified why certain doors are closed if they drink the ‘meritocracy’ cool aid.

    The world’s demographic transition is gradually coming to an end, and the western frontier in the U.S. ceased to be a frontier sometime in the 20th century. Despite bidding war between Facebook and Google and what people think is a “bubble economy”, unemployment in the Bay Area is worse than average. At some point people are going to run out of places to run to, and balanced development in space is going to get on the agenda.

  23. Mark Lutton

    January 28, 2011 @ 3:39 pm

    23

    “Poor ME” suggests doing what I think is the most sensible thing to do: Use your unemployed time to start your own business.

    Unfortunately, that’s not legal. The purpose of unemployment compensation in Massachusetts is to provide funding while you search for a job. You are required to do three job-seeking activities each week. You are forbidden from self-employment. J. K. Rowling wrote the first “Harry Potter” book while on the dole in Britain; in Massachusetts that would be illegal (fraud).

    There’s a rule-of-thumb: you can’t spend more than 20 hours a week on any kind of activity that would be construed as starting your own business.

    You are also not allowed to do anything that would preclude your taking a job immediately. Full-time training? Would it keep you from accepting a 9-to-5 job starting tomorrow? OK, you can suspend your benefits while you complete the training.

    Oh, did you set up a corporation for yourself to handle the income from ad clicks on your web site? Sorry, unemployment compensation is not for business owners and corporation presidents like you.

  24. Mark Lutton

    January 28, 2011 @ 3:53 pm

    24

    By the way, are the University of Phoenix and ITT Tech any good?

    I’m sure you can get just as good an education at either one as you can by setting up and following your own self-education program, but is the degree any more valuable than the one you would write for yourself?

    They are for-profit institutions and have something they proudly call “National Accreditation”, disparaging the “Regional Accreditation” that inferior schools like Harvard and M.I.T. have.

    Here’s what I find in complaints online:

    –They cost just as much per course as Harvard or M.I.T.

    –The programs you want have lots of prerequisite courses.

    –They use high-pressure sales tactics, committing you to a long-term program.

    –Most students can get financial aid from the government, thanks to “National Accreditation”.

    –The teaching methods are oriented toward shoving people through the courses giving them passing grades, without a lot of regard to mastery of material.

    –They are not “diploma mills”. A diploma mill basically takes your money and gives you a diploma in “Life Experience.” Here you do have to take courses, such as they are.

    –The course material is pretty good and you can actually learn as much as you would at a typical college, if motivated.

    — Hiring managers are not impressed by a University of Phoenix or I.T.T. Tech diploma.

    True?

  25. philg

    January 28, 2011 @ 5:29 pm

    25

    Mark: I don’t think you have to wonder about how much University of Phoenix charges. They list their prices online. For an education bachelor’s, one of the most common, it is 385+90 per online credit hour. http://www.phoenix.edu/programs/degree-programs/education/bachelors/bsed-e/v003.html says that 120 credits are required. So that’s $57,000. Is it a bad value? Including the value of pension and other benefits, an elementary school teacher could be earning $57,000 every three months.

    “The teaching methods are oriented toward shoving people through the courses giving them passing grades, without a lot of regard to mastery of material.” — University of Phoenix cannot be considered an innovator in this area.

    The original sales pitch for University of Phoenix, either online or face-to-face, was not that tuition would be less than at a state college. The big improvement was that students could take classes at night and on weekends, thereby retaining their 9-5 jobs. A University of Phoenix bachelor’s degree therefore comes at the cost of a lot of missed TV programs and social events, not at the cost of four years of foregone income.

  26. Z. Constantine

    January 28, 2011 @ 6:23 pm

    26

    As a recently-graduated member of the unwashed and unemployed masses, I can add some back-and-forth from a discussion with a department of labor staffer (relevant at least insofar as Washington State unemployment goes):

    “So can I take part-time classes at the university?”

    “You can, but students are not eligible for unemployment benefits.”

    … and there you have it. Want state unemployment benefits? Don’t go to school.

  27. Maud

    January 28, 2011 @ 6:31 pm

    27

    A good friend of mine is an executive at an elite finance firm. He has a bachelors degree in English from Harvard. He spends his day sitting in a quite office calling up firms and renting assets from them and then loaning them to other firms. Most Fridays he’s out by 3:30. In anything near an efficient world his job wouldn’t exist. The guy at the small firm would just directly call the guy at the big firm. By his own admission little of what he *learned* at Harvard has been useful to his career. Say there is a market upset, his firm/department loses a bunch of money and he gets laid off is his time best spent (1) learning SQL (2) setting out the storm — possibly for a long while — looking for another firm to hire him once the markets stabilize? This probably wasn’t the kind of person who you had in mind with your remarks, however, and that comment is meant as proof that your remarks are not generically true (obviously we could find more modest instances of this same point).

    Conversely, though, take an unemployed 45 year old who meets my friend. It would be crazy for him to say “I’m going to go get a bachelors in English so I can have a a nice beach house like that other guy”. There are some jobs that require technical knowledge, but for the most part they quickly become commoditized. Mediocre SQL programming is very cheaply outsourced to India. And mediocre SQL programming is what someone who can’t find a job at 40 learns at his community college. I have several friends who are highly paid programmers — but they are mostly paid for their design/management/quality control skills and not for commodity level basic programming abilities.

    With nearly negligible exception today’s economy only values common sense, management, and sales. Even at a place like Apple, I’d wager that the vast majority of expenses are in these areas. Yes, their 10-k may say X amount to engineering, but 80% of that is probably to the engineering management that oversee a bunch of 22 year olds who do very well by absolute standards, but only see a tiny fraction of the pie.

    My point is that the skills our economy values are seldom taught in schools, and rarely at nights in community colleges. On the whole, most people who try and can’t find employment in society are stupid and/or stubborn. The fact that all of those unemployed 45 year olds in Boston aren’t showing up for your course is proof that they don’t have the drive and enterprise that our economy values (much more than low-level technical skills). Joe Smith, probably 45, at Small Financial Firm X has probably made a decent career at his firm because he was lucky enough to pick up the phone the day my friend called with the seemingly great idea to rent out some of their assets that were just sitting at his firm. He could start calling around looking for a better price, but his too old or lazy. He like most other, 45 year olds, is stupid or lazy (just somewhat less-so than those unemployed). Even my friend is old and lazy. He could stick around to 5 on Fridays and probably save up enough get a second beach house.

    Basing our social programs on the idea that 45 year olds should stop being stupid and stubborn is pure fantasy. The basic fact is that the human biology seems to dictate that there will be intellectual losers (that is 45 year olds who refuse to do simple things that could get them a job). I personally believe that we are a wealthy enough society to take care of them, at least for a while. I also think that those who are critical of the programs that do take care of them underestimate the costs of not taking care of them.

    If you think I’m wrong, what’s your plan to start to make all of these people spend their days learning SQL? It’s only a viable plan if it can be implemented. It’s not like these people sit around collect their benefits for 90 weeks and then spend the last 9 weeks learning SQL (if this was the case, I’d agree that cutting the duration would be a good idea). My experience has been that employers are very forgiving and that the people who get laid off (at least in the first few rounds) are people that should have been laid off years earlier. If your point is that people who are unemployed because of their own stupidity or lack of motivation shouldn’t be supported by society, then there are a lot of people who should get zero weeks of benefits.

  28. Nemanja

    January 28, 2011 @ 7:02 pm

    28

    Phil, I think problem unfortunately runs deeper. I overheard a CEO of an industrial company in middle America on CNBC today complain that their major problem right now is that they can’t find enough blue collar workers with basic math skills (i.e. addition and subtraction). If people can’t do arithmetic, it’s hard to teach them SQL. Fundamentally, I think U.S. needs more tiger moms and a significantly more rigorous elementary and high school education system.

    Having said that, I think it would be a really good idea to condition extended unemployment benefits with mandatory and paid hands-on job training. I do not think one is a substitute for other.

  29. philg

    January 28, 2011 @ 7:05 pm

    29

    Nemanja: Thanks, but I don’t think that a prevalent lack of basic math skills makes my idea a bad one. It just means that one of the educational offerings should be “basic math”. Nobody was born knowing how to do arithmetic, so we should have confidence that it can be taught (though I guess we have proven that it cannot be taught consistently by unionized teachers giving lectures!).

    Adults learn many skills faster than kids, contrary to popular belief, so the fact that an American missed out on math during K-12 does not mean that he or she is doomed forever to be mystified by numbers.

  30. Wayne

    January 28, 2011 @ 8:28 pm

    30

    “U.S. employers truly are somewhat starved for people with required/relevant skills” — Is this true?

    If there is a skills shortage, wages rise for that occupation, as employers compete for limited labor supply.

    But it was my understanding that there are no occupations in the US economy where wages are rising, and the high unemployment rate is due to depressed aggregate demand throughout the economy.

    Is that not true? If it is not true, it is easy to prove — all you have to do is specify the occupation with rising wages.

  31. philg

    January 28, 2011 @ 9:58 pm

    31

    Wayne: I think your point is generally valid, i.e., that if something is truly scarce its price should go up. In the case of these manufacturing businesses, though, I guess the market solution to scarcity at the current price is that the company moves to China or Mexico.

    http://www.bls.gov/news.release/eci.t05.htm shows that employers on average were paying about 2.1 percent more for workers in December 2010 compared to a year earlier. There seem to be variations from 0.9 percent up to about 7.5 percent, depending on industry, but it isn’t broken down by skill.

    http://money.cnn.com/magazines/moneymag/bestjobs/2010/ doesn’t show the change from 2009 to 2010, sadly.

    http://www.payscale.com/payscale-index/ shows the overall trend by metro area and industry, but again not by skill.

    [Moderator: Probably you should delete this and the comment above, because neither relates to the question of whether it makes sense to pay people to sit at home rather than do something that builds their skills.]

  32. stephenl

    January 29, 2011 @ 2:13 am

    32

    Actually Wayne is right on and your reply helps solidify the point,
    assuming the above two comments don’t disappear, they actually do relate to why it makes sense to pay people for 99weeks rather than do something that builds their skills.

    The comment and your reply show that there is not really much demand for anybody right now, so retraining people will just move them from one area they are not needed to another. Our recession here is mostly lack of demand (and you could best read through Krugman’s stuff for an explanation). My simplified understanding is it is something like this. The housing bubble bursts and leaves lots of people with large debts. They want to get out of debt, so they spend less. This leads to loss of jobs, placing even more in people in debt and they all spend less. To get out of debt, they need to spend less then they earn, but every dollar earned is someone else’s dollar spent. So someone needs to spend money (step in the government and continuuing unemployment is spending of money). We won’t get out of the problem till enough money is spent. A little inflation would help.

  33. Rick

    January 29, 2011 @ 3:12 am

    33

    I thoroughly disagree with you. I’ve been unemployed since Jan 2009. I’ve had unemployment for about 3 months, then it ran out. I cannot seem to re-apply.

    Personally, people cannot always pick up and move to wherever there are jobs. I have 3 kids in middle/high school, and uprooting them after just moving in 2008 is not going to happen. The job market sucks most everywhere too, so no guarentee that there are jobs anywhere else too.

  34. philg

    January 29, 2011 @ 1:21 pm

    34

    Stephenl: Let’s suppose Krugman is right and the reason the U.S. economy is anemic (while China, India, and Brazil boom) is that we don’t have large enough deficits ($1.5 trillion this year and nearly as much in 2009; http://blog.heritage.org/2010/02/05/past-deficits-vs-obamas-deficits-in-pictures/ has the chart (we have a government that is sized for a substantially more successful and accomplished group of taxpayers; our politicians are doing their share by spending, but we citizens aren’t doing our share by working hard enough to measure up to their hopes and dreams for us)).

    I don’t think “we need to take more than $1.5 trillion from our children and grandchildren every year” is an argument against spending money on skill-building rather than Xbox-playing. My original post did not advocate a reduction in government spending, merely that it be redirected to training. I don’t see how we could be worse off. Suppose that all of the unemployed folks went to cooking school for two years rather than staying home. They wouldn’t be any more employable (though I guess some could become personal chefs for neighbors), but they and their families would eat better for the rest of their lives.

    Rick: I’m sorry to hear that the bureaucracy has kept you from getting the 99 weeks to which you are entitled. Sadly it does seem that government programs primarily benefit those who are experts with paperwork. You can’t “move to wherever there are jobs” because your kids would have to move also? My next-door neighbor here in Boston was in the same situation. He could not find a job in Massachusetts, so he moved to San Francisco where he lives in a tiny apartment. His wife and kids have stayed behind, partly in order to finish school and partly because, as with your kids, they moved here in 2008. The family would prefer to be together all the time, but work and income are a priority for the husband, so he is doing whatever it takes.

    [This situation is not unique, by the way, even among my limited circle of acquaintances; one of my dog-walking companions is married to a management consultant. He has moved to South Africa for a multi-year posting that will give him a good income and good experience. The wife and school-age kids have stayed here. A close friend is a business consultant. He cannot find much in the way of local work, so he is away four days/week in order to generate income for his wife and three kids. My helicopter pilot friends generally go to the Gulf of Mexico for two-week shifts and then return home for some time with the family. My airline pilot friends are away as many as 25 days per month (22 days of work plus whatever time it takes to commute to their base, which may be on the other side of the country).]

  35. Mark

    January 30, 2011 @ 6:37 am

    35

    I own several businesses so I’m frequently contacted by folks
    on unemployment and the emplyment inquiry (from the vast majority) goes
    something like this:
    “Hello Mark, I’m drawing unemployment checks and I must seek out a job
    every so often per the terms of my unemployment plan.
    I’m making almost as much sitting at home as I did at my old job, so I’ve decided to take some time off (for as long as the unemployment insurance
    lasts). Are any of your businesses NOT hiring? And may I use that business as
    a job reference? If you have any businesses that ARE hiring, just say so now and I won’t go any further with this conversation…”
    It’s ridiculous for any soul to be allowed sit for two years and do
    nothing. Why not place these people into work programs wherein they actually have to perform a needed task in order to draw that check? There’s plenty
    of constructive things for these people to do.

  36. philg

    January 30, 2011 @ 2:04 pm

    36

    Mark: Your idea of a public works project would seem to make sense. Economists continue to debate the effectiveness of the 1935 program http://en.wikipedia.org/wiki/Works_Progress_Administration , but there are some differences in the surrounding circumstances. First, federal debt as a percentage of GDP was about 40 percent in 1935 (see http://en.wikipedia.org/wiki/United_States_public_debt ) compared to close to 100 percent now (see http://www.usgovernmentspending.com/federal_debt_chart.html ). But that understates the difference, since Social Security and Medicare obligations did not add another 400 percent (see http://www.nytimes.com/2010/03/12/business/global/12pension.html for how the U.S. owed about 500 percent of GDP in March of 2010). World War II was a peak in terms of straight bond obligations, but considering entitlement promises and state government worker pensions we’re vastly more indebted now than we have ever been as a nation and are entering uncharted waters.

    Second, our infrastructure was a lot more basic in 1935 than it is today. We shouldn’t need more dams and roads. Our schools may be a little shabby, but most are at least as functional as privately owned buildings.

    Third, the government is much bigger today than in 1935. http://www.usgovernmentspending.com/us_20th_century_chart.html shows that government spending was about 20 percent of GDP in 1935 (doubled from the 1930 share), so adding extra workers on the government payroll could have made a big difference in terms of capability. With government spending approaching 50 percent of GDP, though, it isn’t quite clear to me what extra government workers would do or how 1.5 years as a government worker would prepare someone to then get a job in private industry. The “quit rate” for federal workers is minimal (see http://www.cato-at-liberty.org/federal-employees-continue-to-prosper/ ), in both boom and slack times, indicating that they aren’t being lured away by private employers. It may be the case that many government jobs are so slow-paced and lacking in mental challenge that the people who hold them are permanently damaged.

    So.. the idea of, once the 26 weeks of paid-for unemployment insurance are exhausted, hiring people to do some sort of work, may make more sense than paying people to stay home, I think that high-intensity training is more likely to result in sustained private employment for the current unemployed.

  37. Stephen

    January 31, 2011 @ 7:17 am

    37

    Stephenl: The solution is govt spending? Fantastic! Let’s raise taxes to 100% and get the govt to spend all the money in the economy! Govt can buy all the cars, all the food, all the TVs, and then dole them out to the people! What could go wrong? We’d have the most fantastic economy in the world! Krugman says so!

  38. Fred Williams

    February 1, 2011 @ 12:25 am

    38

    My first thought on what you are saying here about the wisdom/results of 99 weeks of unemployment is that the extension was a reaction to a specific set of social and economic circumstances. On the whole unemployment payments are not “solutions” per se, they are safety nets. Do safety nets have a place in our society? I think so. But I also think the core issue in play isn’t the amount of time given or the amount of money we pay out. The core issue is what people have come to expect. Both the employed and the unemployed. Our society has come to expect a certain immunity from circumstance for being specialized. Our schools are set up to turn out specialists and we funnel people down these narrow specialized paths from elementary education through graduate school. You I feel are a unique case where your knowledge is something you use to create solutions to a varying set of problems and opportunities. Most people are not seeing what they can do with their various skills or what could be achieved by adding new skills, they are seeing what they have lost and what no longer exists.

    While it is possible shortening the deadline might actually do more good overall, just as a looming midterm seems to always get done when a deadline is eminent, I think the larger social question is actually how do we change the system to produce more adaptable, creative, free thinking, life long learners.

  39. Mark

    February 1, 2011 @ 1:37 am

    39

    Phil,
    One question that I’ve never had answered is how any sane person, living in the
    U.S., cannot get a job in TWO YEARS. Please explain why Obama sees
    it necessary to allow this to go on…excluding the fact that he’s trying to get
    re-elected.
    John Boy Walton was able to find work during the Depression in less
    time!

  40. philg

    February 1, 2011 @ 2:38 am

    40

    Mark: I do think your line about John Boy Walton is likely to become a classic! Thanks. I don’t think it is fair to blame Obama for this, though. He didn’t hold a gun to Congress’s head.

    Another potential mitigating factor is that when this idea was put forward, back in 2009, intelligent people might have differed on the question of whether or not the entire world was going into a depression and there would simply be fewer jobs to go around for a few years.

    In 2011, however, we’ve seen that world economies are booming and even the U.S. economy is holding more or less steady. So it now makes a lot more sense to wonder “What is it about the 15-30 million Americans that makes them unattractive to the world’s employers?” (presumably a combination of poor skills, specific location, taxes, regulations, and health care costs) and try to address the specific factors that make these folks undesirable for employers.

    [I don’t think it is plausible to argue that businesses are behaving irrationally and that they could make a profit by hiring these folks. When the Chinese market opened up and good labor became available, businesses were very quick to rush in and hire folks. Separately, I just finished James Wolfensohn’s autobiography. What’s the former president of the World Bank been doing since 2007? Investing in Brazil, Russia, India, and China. The book is fresh off the press, but he doesn’t say anything about great investment opportunities being available in the U.S. due to highly skilled folks being out of work.]

  41. Quagmire

    February 1, 2011 @ 4:30 am

    41

    Yet more bad news for our hardest working nerds:
    “Doctoral Dilemma”
    http://pubs.acs.org/cen/science/89/8905sci1.html

  42. Jim

    February 1, 2011 @ 3:04 pm

    42

    Perhaps the burden of payment for unemployment benefits should be shifted completely to American corporations. Their financial commitment could be based proportionately upon their number of employees.

    As I understand it, corporations are reaping the benefits of tax breaks and giving little to none back in return.

  43. philg

    February 2, 2011 @ 1:17 pm

    43

    Jim: Of course employers do already pay for unemployment insurance (the standard 26 weeks), though in fact it might be the case that this ends up coming mostly out of workers’ pockets in the form of lower wages. The employer cares about its total labor cost, including health care, unemployment insurance, payroll taxes, etc. It doesn’t care about the workers’ well-being, standard or living, or after-tax earnings (as long as they keep showing up to work). If everyone had employer-paid health insurance, you could argue that it wouldn’t matter how much health care cost in the U.S. It wouldn’t make us poor to spend more money than any nation on earth because employers were paying. So even if health care grew from 20 percent to 50 percent of GDP we would be just as well off.

    http://gregmankiw.blogspot.com/2006/05/corporate-tax-rates.html is a good overview of why the low-hanging fruit of company profits may not be as easy to harvest as it appears.

  44. Mark

    February 3, 2011 @ 4:34 am

    44

    Phil,

    I’ve enjoyed reading this blog for several years and I cannot recall
    any of your posts receiving as many responses as this one, yet I
    don’t see any reply that explains why a person in the U.S. should
    be able to sit home for two years (while drawing UE) and be able to
    honestly claim they cannot find a job (in said two years).
    Do you have a theory on why it would truly take anyone this long?
    Other than the assumption that they simply will take the free check
    for as long as it’s available?

  45. philg

    February 3, 2011 @ 1:04 pm

    45

    Mark: I think you’re asking a much bigger and deeper question than the original posting. I was asking about whether, given that the government was determined to confiscate money from the working and give it to the non-working, it wouldn’t make more sense to use that money in a different way.

    You’re asking whether it makes sense to confiscate money from the working and give it, with much paperwork but few questions asked, to Americans who recently lost jobs. That opens up a host of philosophical questions. Is it moral to take from the hard-working and give to the non-working? If we want a government that hands out our money, should it go to the recently unemployed, many of whom are not poor (e.g., because a spouse still works), or to the poorest and neediest Americans? If we’re handing out money to the poor because we’re so charitable and big-hearted, why give so much to poor Americans (who are actually pretty well off by world standards; see chart in http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-the-have-nots/ ) and so little to much poorer people in other countries??

    My question had an efficiency-based answer. I don’t think there is an efficiency-based answer to the deeper questions that you’ve raised. The Supreme Court, in 1937, ruled that the government could run wealth redistribution schemes more or less without limit. The government has the power to favor particular groups, e.g., owners of farmland, individual corporations such as GM or AIG, or retired 48-year-old autoworkers, while sticking a 66-year-old working at Walmart with the bill.

    You could make an argument that the recently unemployed are less deserving than the executives who took home $400 million each for their work in bankrupting AIG or the executives who defrauded investors in Fannie Mae to pump up their bonuses and now are sticking taxpayers with their legal bills (see http://www.nytimes.com/2011/01/24/business/24fees.html ), but you’re still left with the fact that voters and the Supreme Court have apparently decided that a principal government function is to rob Peter to pay Paul.

    People who voted for Obama and the Democrats in 2008 were promised that the government would substantially step up its wealth redistribution schemes. Obama essentially promised to steal from the rich and give to the poor. The Democrats delivered on the giving out money (though most has gone to public (mostly financial) company executives via bailouts and to public employee unions and government contractors via the stimulus) part of the pledge. The Democrats changed “rob from the rich” to “rob from the next generation of Americans”, but roughly 50 percent of the population voted for them again in 2010, so one can’t say this is against the will of the people.

    Therefore you’re left with the question of “Is it possible for a majority of Americans to vote for something that is actually immoral?”

  46. Cicely J. Sweed

    February 8, 2011 @ 4:21 pm

    46

    Well, here’s what I managed to do in 99 weeks while I sent out resumes and waited to be hired by someone “full-time” with “benefits”:

    – wrote a business plan to turn my side gig into a consultancy
    – moved from the Bay Area to Los Angeles
    – started working my contacts in LA and expanding my network in the Bay Area
    – applied to graduate school (M.B.A.)
    – applied for grants and residencies for 2011
    – volunteered as a tutor to youth in my community
    – attended three births
    – saw family I ain’t seen in years
    – attended lots of gatherings among old friends
    – buried my grandfather
    – started planning my best friend’s wedding
    – designed and uploaded a website for my new business
    – designed and printed business cards for my new business
    – wrote another business plan for my wine business
    – read a lot
    – wrote a lot (I am an retired Journalist…)
    – prepared a blog to launch in the Spring
    – road tripped all over this wonderful state of California and Nevada too…seeing parts of my homeland I never knew existed
    – moved back to the Bay Area from Los Angeles (contacts expanded)
    – researched commercial space to move into
    – and just as my benefits (that I believe after 14 straight years of hard work I more than earned!!!) are about to disappear…

    I got 3 gigs as a consultant and more coming, I’m bout to go to MBA school, and I’m running the show now as a budding entrepreneur.

    So next time — Mr. Harvard — you start blabbing about all the things people can do in 99 weeks and whether or not hard working Americans deserve unemployment benefits in a fucked economy….Consider that most of us have been putting in the time, we aren’t on Xbox (don’t even own a TV), and instead of “waiting” for some lame employer to hire us, we took our destiny into our own hands and made something outta nothing…

    I think it’s called The American Way.

  47. philg

    February 8, 2011 @ 4:37 pm

    47

    Cicely: Thanks for the update. Your experience confirms the original post’s theory that two years is enough time to get a lot accomplished. I’m also happy for you that future U.S. taxpayers paid you to catch up with family, do some sightseeing, and start a new enterprise. If we expected our children and grandchildren to have infinite money, I’m sure that would be a wonderful thing for them to do for this generation.

    If it worked so well for you, and the benefits were, as you put it, “more than earned”, why limit it to the involuntarily unemployed? Our children and grandchildren could pay for everyone who has worked for “14 straight years” to enjoy a two-year sabbatical.

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