One of the pillars of our economy is employment. Our economy needs jobs because, without jobs, there aren’t enough people spending the money needed to keep our economy going. Since our economy relies on consumer spending for about 2/3 of its activity, it needs people to have money to spend. This is why there has been so much focus recently on jobs. However, it seems to be more than politicians in Washington can do to agree on a jobs plan.
Indeed, the Senate needed 60 votes to pass President Obama’s latest job creation plan, and it didn’t get the votes. Part of the plan, in addition to spending to create jobs, included a provision to further extend unemployment benefits. This becomes somewhat urgent (at least if you think that unemployment benefits should be extended further) as the year draws to a close because approximately 1.8 million people are expected to run out of benefits come January 2012.
Could Unemployment Benefits Be Broken Out?
Of course, the unemployment benefit cost is $44 billion — a fairly small amount when you consider that the total cost of the jobs bill was right around $447 billion. Some observers believe that both sides can agree to spend the $44 billion to extend unemployment benefits out. (Not a big stretch, with an election year coming up.) This means that a completely separate bill, meant to extend employment benefits, might pass, when something with other costs attached might not.
The extension of these benefits is touted as a lifeline by supporters. Without the extension, the economy could sink even further, since there would be fewer people able to pay for basic necessities, let alone discretionary spending of the type that keeps the economy moving along. An unemployment budget is often based around benefits.
There is opposition to the idea of extending unemployment benefits, though. Detractors of the idea point out that many people are content to be unemployed at this point, relying on the government to continue to provide them with cash. Plus, with such a long period of eligibility for unemployment benefits, it can lull job seekers into thinking they have plenty of time. Unfortunately for job seekers, there is a bias against those who have been out of work for long periods of time. The longer someone is out of work, the harder it is for them to get out of the unemployment line. Extending benefits might only worsen the problem. Perhaps it’s time, think some, to provide a little jolt in the way of letting unemployment benefits run out.
What’s Next for Jobs?
No one really knows what is next for the economy. Hiring remains fairly stagnant. As long as companies are hoarding cash and not making new hires, it will be difficult for the economy to really start recovering.
It is also worth noting that the current job situation has given rise to a new jobs economy. Instead of seeing a return of full time jobs that come with benefits, there is a good chance that we will continue to see an increase in jobs without benefits: Adjuncts, freelancers and temps have all seen growth since the 2008 financial crisis. It could be that the future of jobs is a shift away from full time and benefits to contract work without benefits. And, of course, this might be the perfect environment for starting a business.
What do you think is next for the job market — and the economy?
Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.