Study: Trimming unemployment benefits helped economy

Study: Trimming unemployment benefits helped economy

President Obama’s policies shrank employment and delayed the nation’s economic recovery by discouraging people from working. The Congressional Budget Office says Obamacare will shrink employment by around two million workers, which is not surprising, since it punishes some people for earning more money by suddenly taking away thousands of dollars in healthcare tax credits.

Another example is unemployment benefits. Their excessive duration under the Obama administration retarded economic growth until 2014, when benefits were finally cut back to normal levels over Obama’s objections. A recently-released National Bureau of Economic Research study finds that cutting unemployment benefits caused the lion’s share of America’s job growth in 2014.

According to this January 2015 working paper, cuts in unemployment benefits’ duration caused “nearly all” of 2014’s employment growth, as illustrated by “the abrupt reversal in the relative employment growth trend of high benefit states and border counties in December 2013, right at the time when the benefit durations were cut.”

Reviewing the study, The Wall Street Journal concluded that absent the unemployment insurance extension contained in Obama’s stimulus package, both individuals and the overall economy “would have been healthier,” including the states hardest hit by the recession. Its January 27 editorial argued that “the extra benefits” contained in the stimulus most “harmed the people and regions that suffered the worst of the recession and weak recovery.”

Last February, The Wall Street Journal pointed to similar research findings, in the editorial, “Fewer Jobless Benefits, More Jobs.” It noted that North Carolina, after refusing to extend unemployment benefits, was “rewarded with more jobs and a falling jobless rate.” After it “let 73 weeks of jobless benefits expire in July, and in a mere six months the jobless rate fell to 6.9% in December from 8.9% in July. That’s far more rapidly than the decline in the national rate, which fell to 6.7% from 7.3% in July. North Carolina had trailed the national economy with a much higher rate since the recovery began.” Moreover, North Carolina employment had “increased by 1.3% since the benefits expired, while the national average is only 0.5% over the same period. According to the Bureau of Labor Statistics, the state has added nearly 55,000 new jobs during that period to more than 4,333,000, which appears to be a record high. In December 11,100 net new jobs made North Carolina one of four states with statistically significant job gains.”

Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. Hans also writes for CNS News and has appeared on C-SPAN’s “Washington Journal.”


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