Stunning discovery: When government stops paying people not to work, many then find jobs. Who knew?
Turns out that a definitive study shows that a MAJOR factor in the nation’s 2014 jobs recovery is the dramatic cutback in unemployment benefits. Here’s a short, readable article summarizing this insight, with links to the more detailed WALL ST JOURNAL article and the study itself.
Common Sense with Paul Jacob
Job Growth in 2014
President Barack Obama takes full credit for the job growth in 2014. Democrats on the Internet relentlessly push these growth rates with typically goofy superlatives like “highest ever” or “highest growth rate in decades.”
So, what did Obama and the Democrats do in 2013 and 2014 that led to the growth we saw last year?
Well, Obama refused to renegotiate with Republicans on any unemployment or budget reforms.
As 2013 ended, we heard Democrats complaining that stingy Republicans were letting federal government extensions of unemployment compensation (which had been re-extended many times) lapse altogether. Obama predicted disaster. The Keynesian economists who circle the Democratic Party like moths to a candle held to a simple prophecy: because of a hit to “aggregate demand,” unemployment would increase.
Instead, in 2014 employment bounced back.
In a droll quasi-opinion piece, “President Costanza’s Jobs Boom,” the Wall Street Journal reports that “job growth in 2014 was roughly 25 percent higher than any post-2009 year. Joblessness plunged to 5.6 percent from 6.7 percent. Net job creation averaged 246,000 a month.”
Citing a National Bureau of Economic Research study by economists Marcus Hagedorn, Iourii Manovskii and Kurt Mitman, which treated the abrupt policy change as a “natural experiment,” the Journal reveled in the knowledge that the increase in incentives from lapsed benefits led unemployed workers to (gasp!) seek jobs.
And they found them. Granted, many of the new jobs are not as good as their pre-bust jobs. But they are jobs, which is better than nothing.
So when your big-government promoting friends attribute 2014’s job growth to Democratic policies, ask which policies, precisely. And ask why Obama’s predictions of 2013 for disaster in 2014 didn’t pan out.
This is Common Sense. I’m Paul Jacob.