The Cost Of Extending Unemployment Benefits: $100,000 Per Job Created
“Weighing benefits against costs is the way most people make decisions – and the way most businesses make decisions, if they want to stay in business. Only in government is any benefit, however small, considered to be worth any cost, however large.” –Thomas Sowell
When it comes to unemployment insurance, we’ve always tried to balance the idea of helping people who’ve just lost a job with a recognition that giving people unemployment insurance significantly reduces their motivation to find a job. That latter concern now seems to be treated as irrelevant and we seem to be on course to: continue unemployment payouts to debfinity and beyond…
Today, the Congressional Budget Office released a report informing readers that extending unemployment benefits for a year, an outlay which would cost the federal government $30 billion, would, because of its allegedly stimulative impact, generate 300,000 jobs.
Even if true, neither the CBO, nor the Associated Press in covering the report, noted that this result works out to a cost $100,000 per job. Bravely assuming that each new job created pays $40,000 per year, that’s a $60,000 loss in value received compared to money spent. The government’s tax take at all levels on that amount of earnings is likely about $10,000 or so. All of this is apparently considered pretty smart by the AP’s Sam Hananel and a quoted leading Democrat:
REPORT: EXTENDING JOBLESS BENEFITS CREATES JOBS
Extending the current level of long-term unemployment benefits for another year would add 300,000 jobs to the economy, according to a report from the Congressional Budget Office.
The analysis released Wednesday from the nonpartisan office estimates that keeping jobless benefits would cost the government $30 billion. But it would also lead to more spending by the unemployed, boosting demand for goods and services and creating new jobs.
Federal long-term unemployment benefits are set to expire on Dec. 29 for more than 2 million workers unless Congress approves an extension. Democrats have called for reauthorization of extended benefits, but Republicans generally oppose more jobless aid without additional spending cuts to offset the cost.
“This report is more evidence that extending help to those who are seeking work is a better investment for our economy than extending tax breaks for those resting comfortably atop the economic ladder,” said Rep. Lloyd Doggett, D-Texas, a member of the House Ways and Means Committee.
It’s bad enough that they want to keep long term unemployment benefits going indefinitely, but trying to convince us that it’s actually a good thing is insulting to our intelligence.