Republicans Like High Unemployment and Short Unemployment Benefits

[Omaha Steve]

http://www.huffingtonpost.com/miles-mogulescu/republicans-like-high-une_b_650542.html

Miles Mogulescu

Entertainment attorney, writer, and political activist
Posted: July 18, 2010 06:16 PM

Republicans may in part oppose extending unemployment benefits for short-run political gain--The worse the economy is doing in November, the better Republicans believe they'll fair in the elections.

High unemployment rates and short unemployment benefits supress wages and increase the profits of the GOP's corporate donors in the short-term. But the truth is that it undermines the health of the economy in the long-term.

According to Mark Zandi, chief economist for Moody's and a former campaign advisor to John McCain, unemployment benefits are one of the most effective ways of stimulating the economy, with each dollar the government spends on unemployment benefits generating $1.61 in economic growth. And the impact is rapid. Someone getting an unemployment check goes right out and spends it on groceries, gas and other necessities, which increases economic demand and leads to potential job growth in the sectors that manufacture and sell life's necessities. Right now Republicans don't want to see the economy and employment grow since the more the country suffers, the more they believe voters will blame it on Obama and elect Republicans. Cynical!!!

But high unemployment and short unemployment benefits (along with a low minimum wage) also fits perfectly into the GOP's long-term political goals. They suppress the wage rate and increase the short-term profitability of corporate donors who have to pay less to hire and retain workers. Recent studies show that as many as 35 million Americans will be unemployed for at least part of this year. The more people fear losing their jobs, the less bargaining power they have and the more bargaining power corporations have.

Republican charges that unemployment insurance encourages people to sit on their asses and not look for work is a gross distortion, particularly in a recession when there are five applicants for every job. An average unemployment check of $300 a week or about 40% of a worker's average wage is hardly going to make most people want to stay out of work for long. But unemployment might buy unemployed workers time to look for a job in their former vocation at a wage similar to what they made in the past, rather than to take a less skilled job for less money right away. A factory worker who used to make $20 an hour might try to hold out a little longer for a similar-paying job. And a white collar worker who used to make $50,000 a year maintaining computers might wait a little longer to find a job that uses his/her training and skills at a comparable salary. But if you cut someone off from unemployment after 26 weeks and they're facing possible homelessness, they might take a job at Mickey D's or Walmart for close to minimum wage. Or the $50,000 per year computer technician might accept a similar job for $40,000 year.

The net effect is to drive down the median wages across the US economy, which in the short-term may increases corporate profitability and make Republican Party donors happy.

FULL story at link.

[Towlie]

1. To a Republican, low unemployment is an undesirable "labor shortage."

[laughingliberal]

3. Sure. It's the real reason the corporate powers oppose reproductive freedom for women.

Low population growth results in labor shortages which drives wages up.

[rrneck]

2. Frightened desperate workers are compliant workers. nt