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The Breakdown: Economy

Obama jobs bill revives jobless benefits debate

Sally Herships Sep 15, 2011
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The Breakdown: Economy

Obama jobs bill revives jobless benefits debate

Sally Herships Sep 15, 2011
HTML EMBED:
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Jeremy Hobson: The government said this morning that the number of people filing for unemployment benefits hit a three month high last week: 428,000. Those benefits have a time limit, but President Obama wants to extend it because of the weak job market.

Sally Herships has more.


Sally Herships: Long-term unemployment benefits may be extended yet again — this time from 99 weeks to 151. The Obama administration would also like to see big changes to unemployment insurance.

Jeff Frankel is a professor at Harvard’s Kennedy School of Government. He says under the plan:

Jeff Frankel: They’ve made it possible to use unemployment benefits, not just to be unemployed, but also to start up enterprises.

In other words, federal funds could be used to help the unemployed move from looking to be hired by someone else to becoming entrepreneurs. And then there’s something called wage insurance. Frankel says workers can be reluctant to take jobs at lower wages than they previously earned.

Frankel: But under wage insurance, you get to keep the unemployment benefits even though you’ve now taken a new job and they make up the difference.

So will new rules and persistently high unemployment sway traditional opponents of unemployment benefits? Here’s economist Chris Edwards at the conservative Cato Institute.

Chris Edwards: A major problem with unemployment insurance is that it tends to induce people to remain unemployed longer. Like any government subsidy program, if you subsidize something, you get more of it.

President Obama has urged Congress to pass the unemployment measures as soon as possible.

In New York, I’m Sally Herships for Marketplace.

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