01.20.2012
Policy Points
Off the Charts explains why increased “flexibility” in state unemployment insurance systems isn’t so good.
Letting states divert UI funds for other purposes would start the UI system down a slippery slope, even if those other purposes might benefit some unemployed workers, such as providing additional job training. Among other things, states could replace state or local funds now used for job training or other such purposes with diverted UI funds and then shift the withdrawn funds to other uses, including tax cuts. The net result could be a reduction in unemployment benefits with little or no offsetting increase in employment services.
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Similarly, waiving the prohibition against excessively burdensome administrative obstacles would enable states to reduce UI benefit costs and tax rates by making it harder for eligible people to participate in the program — a less overt way to cut costs than shrinking benefit levels or the number of weeks of benefits.
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Finally, the House provision could also allow states to impose new eligibility requirements not directly based on workers’ employment history, such as requiring UI recipients to have a high school diploma or GED.
01.20.2012
Policy Points
Mark Thoma asks how the Federal Reserve got things so wrong and how it can do better.
The Fed’s errors can be placed into two broad categories, the failure to ask the right questions before the crisis, and the failure to act quickly and aggressively enough once the crisis began. The first problem had a lot to do with economists’ undue faith in their own models and abilities – the financial meltdown problem had been solved so no need to worry about that – while the second problem is at least partly due to the way in which the public interest is represented on the Fed.
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I don’t know how to insulate economists from themselves, every few decades we seem to have the need to declare that we have solved important problems only to be spectacularly wrong, but the representation of the public interest in policy decisions can certainly be improved. That won’t fully overcome the Fed’s tendency to hesitate and take small steps when bold action is needed, but better representation would certainly give more weight to the public’s desire for the Fed to do its utmost to bring an end to the many problems that households face when the economy is operating at subpar levels.
01.19.2012
Policy Points
Economic policy reports, blog postings, and media stories of interest:
01.19.2012
Policy Points
For the benefit week ending on December 31, 2011, some 27,963 North Carolinians filed initial claims for state unemployment insurance benefits, and 142,665 individuals applied for state-funded continuing benefits. Compared to the prior week, there were more initial and continuing claims. These figures come from data released by the U.S. Department of Labor.
Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 18,380 initial claims were filed over the previous four weeks, along with an average of 125,385 continuing claims. Compared to the previous four-week period, the average number of initial claims was higher, as was the average number of continuing claims.
One year ago, the four-week average for initial claims stood at 21,747 and the four-week average of continuing claims equaled 139,061.
In recent weeks covered employment has increased slightly and has returned to the 3.73 million level recorded a year ago. Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were almost three years ago.
The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007.
Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.
01.19.2012
Policy Points
Adam Levitin of Credit Slips argues that “the fundamental rule of American capitalism is ‘profit, but fairly’.”
Bottom line here is that the benefits of increasingly specialized financial intermediation are questionable, and the role of government in financial intermediation and development is often overlooked. Privatized financial intermediation often means privatization of gains and socialization of losses, as we have recently seen. More critically, though, absent vigorous regulation, it easily dissolves into a system of profit über alles, in which rules of fair play (and we can debate just what those should be) are disregarded as inconvenient. For capitalism to work in a democracy, it is necessary that everyone play by the rules of the game.
01.18.2012
Policy Points
Economic policy reports, blog postings, and media stories of interest:
