Steve Pearlman chat

I was able to pose a question to Steven Pearlstein, the Washington Post's business columnist that I have a low amount of respect for, during his online chat today:

Washington, D.C.: Hi Steve, Wouldn't your proposal to expand unemployment benefits simply subsidize unemployment, thus creating more of it? I know that last spring-summer when I was unemployed for 3.5 months I spent the first two months as a taxpayer-subsidized vacation. I'm not going to lie, it was great being able to spend May and June outside taking advantage of the weather, reading, watching the World Cup etc. but making such behavior even more attractive doesn't strike me as great public policy. Other friends of mine that have lost their jobs have similarly taken their time finding jobs by taking advantage of unemployment checks.

With unemployment currently at 4.5 percent getting a job shouldn't be too hard. Seems to me the best form of unemployment insurance is just creating the most dynamic and growth-oriented economy possible.

Steven Pearlstein: Look, this is always a tradeoff. Europeans give too much protection, and as a result people live off unemployment for years. Not a good model. But there's no way to design a policy so that people who really can't get a job get help while people who can but chose to loaf a bit are denied. There is no way to effectively administer such a program. So you have to use next best approaches. Give people enough money so, when combined with some savings and some part-time work and help from family, people can get by while they look for an appropriate job. But don't give them so much that they don't have plenty of incentive to find that job. And with wage insurance, you take away some of the sting of finding a job where you start out a bit lower on the ladder than your last job. Again, the insurance doesn't last forever, but covers, say, half the income loss for two years. None of it is perfect. But it takes some of the sting out of things. And its a start.

My reaction: Steve says, "Give people enough money so, when combined with some savings and some part-time work and help from family, people can get by while they look for an appropriate job. But don't give them so much that they don't have plenty of incentive to find that job."

But I think we already exist at that stage. When I was unemployed I was receiving something like $1,200/mo. Working part-time at $8/hour for only 20 hours a week would have put me at around $1,800. So why do we need yet more unemployment insurance?

And actually, I only received two checks from the government because I didn't take full advantage of the unemployment insurance program. That was living mostly off of savings. If I had actually taken the full amount I was owed I could have afforded to stay unemployed for quite a while.