Sen. Rand Paul thinks the long-term unemployed have had too much cake. That what they really need is a swift kick in the you-know-what. And, in his compassion, he wants to give it to them.
It's about the incentives, Paul said yesterday on Fox News. If you pay people not to work, they won't. And if you want them to work, you should stop paying them not to. So extended unemployment benefits "do a disservice to workers, causing them to become part of this perpetually unemployed group." (Emphasis added). In other words, we just have to stop coddling the jobless, and they'll find jobs ... even though there are three of them for every opening.
Paul has the self-assurance of someone who doesn't realize the world is more complicated than Econ 101. Now, it's true that unemployment benefits make people stay unemployed for longer. They use this lifeline to look for the best, and not necessarily the first, job they can find. But it's not true that long-term benefits are causing long-term unemployment. It's (yes, here we go again) the economy, stupid.
You can see that in the chart below that compares the change in long-term unemployment (blue) with the change in jobs from six months prior (red). The simple idea is the biggest increase in people being out of work for six months should happen six months after the biggest job losses, and then fall together. That's what we see. Now, long-term unemployment did increase faster in the months after benefits increased—which I've annotated with arrows—but the timing is off. It's hard to explain why long-term unemployment peaked so soon after benefits expanded to 99 weeks if those benefits are to blame. It's not hard to explain why long-term unemployment peaked six months after job losses did.