Blaming Unemployment Insurance for Unemployment
JPMorgan Chase released what it called an economic research report (pdf) last week that purports to show that extended unemployment insurance payments cause higher unemployment and longer-term unemployment.
Seriously.
the availability of these benefits has almost certainly played a significant role in the record rise in the average duration of unemployment. Consequently, they have also had a role in the stunning rise in the unemployment rate over the last two years.
Noting the current correlation of high unemployment, longer average duration of unemployment and expanded unemployment benefits, the giant, previously bailed-out Wall Street bank asserts:
The magnitude of these effects has been the subject of a vast amount of econometric investigation. The variable most studied is the degree to which unemployment duration increases for a given change in the maximum available duration of jobless benefits. Most estimates of this elasticity have centered on a finding that an increase of one week in the availability of benefits raises the average duration of unemployment by 0.2 week.
Taking an assumed national average of an additional 47 weeks of unemployment insurance payments to jobless workers, the report continues:
Based on the widely accepted 0.2 estimate of the responsiveness of average duration to the length of benefit availability, the 47 extra weeks of benefits could be expected to increase average unemployment spells by 9.4 weeks. Since only about half of the unemployed are eligible to receive unemployment benefits (the other half generally have not met the requirements for sufficient prior employment or lost their jobs through layoffs), the total average unemployment duration would be expected to increase by 4.7 weeks.
Got that? The report goes on, then, to extrapolate that the increased duration of unemployment they assert is caused by extended unemployment insurance is itself the cause of a 30% increase in the unemployment rate:
—this would imply a 30% increase in the unemployment rate. Starting from an unemployment rate before the recession of roughly 5%, this means that increased benefits can account for 1.5%-pt of the subsequent increase in the unemployment rate.
Never mind that mass joblessness and record rates of long-term unemployment both preceded the extension of additional jobless benefits.
This kind of cockamamie pseudo-science would just be laughable if it weren’t a potentially dangerous threat to the survival of millions of unemployed Americans. You can bet that bank lobbyists and their conservative cronies are circulating this report and others like it to gin up opposition to extending unemployment benefits.
And this from JPMorgan Chase, the firm that helped bring down Lehman Brothers, helped precipitate the Great Recession resulting in millions of Americans losing their jobs, and whose CEO Jamie Dimon meanwhile took home a $17.6 million compensation package last year.
Reading this JPMorgan Chase report reminded me of a wonderful little book that my 7th grade math teacher distributed to the class. By a terrific writer Darrell Huff, it’s titled How to Lie with Statistics and was first published by Norton in 1954.
Still available in print, the book introduced me to the notion that correlation does not imply causation — meaning that just because two things occur together it doesn’t imply that one causes the other.
But, alas, that appears to be beyond the grasp of the genius economic minds at JPMorgan Chase.
Tags: unemployment, unemployment insurance
I have not had a job or an income other then through odd jobs for over a year and I have not been on any public assistance what so ever during this time. The year before that, work was negligible for me. I am now living in my storage unit. Enough said.
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What alternative universe are these asses living in? Wall Street financial institutions caused this mess. Where is my bailout? I lost my job a year ago. I like millions have worked all of our lives. You need to pay for your mistakes and pay the millions on unemployment what they have paid into for years. You pay up JP Morgan Chase.
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Executives have no idea what it’s like to really have to work for their money. They go to the office, work for a couple of hours, go to lunch for a couple of hours and fall asleep in meetings for the rest of the day. They take home five grand plus stock options for that hard days work and they wonder why the average grunt worker shakes his head in disgust.
Truth is Jamie Dimon never did a days work in his miserable life.
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Well said there, Duck.
You’re no quack (couldn’t help it)
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Chase credit cards attempted to steal even more money from me — in addition to their bailout — by holding up the posting of my payment, which was due December 31. They posted it, they said, January 1 and racked up a $39 late fee. I objected, pointing out that the post office certainly did not deliver my check to them on New Year’s Day. The flaked me off, so I complained to the Michigan Attorney General. Then I got a phone call, saying they were rescinding the late fee. These crooks will lie, cheat and twist facts to squeeze a few dollars more out of us. Chase should be broken up into a couple dozen banks; let them compete fairly.
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SOPHISTRY! The right wing capitalists always do exactly this- turn themselves into a pretzel to pretend things are not their fault, and to blame the victim. They have no mother, as they say in Spanish. The question is WHY IS THERE UNEMPLOYMENT IN THE FIRST PLACE? If their precious capitalist system is so great, why isn’t evrybody working? If they fail in their responsibilties (big time!) then we the government have to step in and take up the slack. By the same token any failing factory should be taken over by the workers, empty office buildings should be taken over by the homeless. Capitalists are inept bunglers who mismanage everything they touch, then cry FOUL! when someone tries to call them on it.
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you know it’s ok when the government helps them but when the government tries to help the middle class they call it socialism.
Chase speaks of a 30% increase in unemployment due to unemployment insurance. Well then, to get people off of this evil unemployment insurance, I suggest JP Morgan Chase and all the other corporations start hiring. Now there is your solution Mr. Dimon. Not what you had in mind?
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Gotta love ‘em They bilked my son out of over $300 in ‘overdraft’ charges. He thought he had money to cover when he used his ATM card to buy snacks at school and a $2 soda wound up costing him $36. Do that often enough without the bank sending you a little ‘tickler’ that says ‘hold up there, you’re out of money’ and over the space of a week you’re so far in debt to them it takes the next 3 paychecks just to get out.
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At least that particular bank scam is ending. Only thanks to laws passed by this Congress and signed by President Obama, though.
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So since my Senator from Oklahoma is now sitting on the Unemployment checks, that will be good.
If they don’t get the checks ……… they will go back to work next week.
Problem solved!
Thanks JPMorganChase
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This whole thing sounds like a Stephen Colbert skit, except it’s not funny at all.
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Thanks for the reference. I’ll look up that publication. That “tactic” reminds me of an anecdote that one of my professors told us when I was still in college, back in the ’60′s.
A hired “researcher” put a fly on the desk, and then told the fly to fly, and the fly flew. Then, he pulled off one of the fly’s wings and told the fly to fly. but the fly only buzzed around in circlies. Then, he pulled off the fly’s other wing and told to fly to fly, but the fly only walked around. In his report, the hired “reseacher” stated that the “obvious conclusion” to this experiment is that a fly’s hearing organs are in their wings; because, a fly without wings can’t hear!
An apt parallel, in my opinion.
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Sheesh, after a day like today, with Dr. No and his Senate Republicans blocking the continuation of existing extended unemployment insurance — causing these programs to lapse along with the existing 65% COBRA subsidies — we all needed a laugh… and we got one thanks to you LMRollins.
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I have been unemployed for over a year after working with Bear Stearns who Chase purchased. I’m not proud being unemplyed. I receive enough just to get by. I am not able to keep the car and home maintained. The trama involved being unemployed stresses me out daily. Yes, I can find a low paying job but it would not pay my mortgage and expenses.
There are people that has not been affected by this economic colapse at all. Some are neighbors that are still purchasing new cars, improving their homes and going on nice vacations. These same people think I’m milking the system but they have not been where I (we) are today.
I will have to enter another field eventually as my skills have eroded as there is no way to practice and keep up with mainframe computers at home without access to a mainframe.
Good luck to all and I’m happy Chase is doing so well!
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The confusing thing about the unemployment rate is that some doesn’t understand that the numbers of people in the list are those who are jobless and are searching for one. Those individuals who are unemployed and stop trying to find work are taken off the list so they aren’t considered unemployed. That’s why it appears that the numbers lessen from the previous month. Reporting numbers like this gives people the idea they will soon be able to stop getting cash advances, which is actually very untrue, especially when thousands just lost their jobs with the census bureau.
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Because of these occurrences, many people are having more difficult times coping. In fact, they couldn’t pay out their bills that their properties have to be sold. Even stored items in storage units are auctioned off. So when you decide to put your things in storage, try this site http://www.south75storage.com.
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JPMorgan Chase is facing difficult questions about its management of servicemember funds. The bank has foreclosed on over a dozen active servicemembers’ homes. The circumstances under which the homes were foreclosed were very suspect. Active duty military member’s student education loans are the next point of contention for the bank.
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I’ll have to divert the topic.
small business owners in America are the people who are creating two out of three jobs here in America. These are also the people especially in today’s economic environment that are being frowned upon by banks that originate traditional small business loans. Banks will often decline these small business owners, thus more unemployment.
Is it me? or should they done something about this!
Merchant Cash Advance
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Like the pot calling the kettle black! What a joke http://change.gov/ has been
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Reading this i finally took a break from my job. This post just gave me a few minutes of relax =] I tried to find a rss feed on your site so that i could subscribe for some more. Ill be sure to come here more often from now on =]
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You don‘t have to tell a potential employer that you’re receiving unemployment benefits. When applying for a new job, there is rarely an opportunity to mention this. Though your resume may show an employment gap between jobs, don’t give an explanation of benefits on this document. Only mention your unemployment benefits if asked during the interview, though you might not even be asked. If the hiring manager asks, answer honestly and in a way that still makes you sound like a valuable asset to his company. For instance, “I took unemployment benefits for a few months so I could focus on applying for high-class companies like yours that would best value my experience.”
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