Extending benefits helps individuals but increases joblessness

Some liberals become indignant and make meaningful debate impossible whenever a conservative points out the tradeoff: that unemployment insurance can reduce overall employment. For instance, in 2010 then-Sen. Judd Gregg, R-N.H., said extending emergency benefits “encourages people — rather than go out and look for work — to stay on unemployment.” Atlanta Journal-Constitution columnist Cynthia Tucker mischaracterized Gregg’s argument this way: “Giving people who lose their jobs unemployment benefits makes them lazy and unlikely to look for work…”

But that’s not the conservatives’ argument. The argument is that when you pay people for being unemployed, you decrease the incentive for them to find work. This will cause some people — acting out of rationality and not laziness — to turn down some job offers and to not search as hard as they might otherwise. Studies suggest this effect is modest, but real.

UI insurance doesn’t provide a comfy living. In Maryland, if you were earning $600 a week ($15 an hour, or about $30,000 a year), your unemployment insurance would be $300 a week.