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The Right to Income Security

June 29, 2010

In light of MZ’s post on the refusal to the Republicans to extend unemployment benefits to over a million of our brother and sisters who cannot find work, I thought I would recognize some core Catholic teaching in this area. Here is John Paul II in Laborem Exercens:

“The role of the agents included under the title of indirect employer [at the national and international level that are responsible for the whole orientation of labour policy] is to act against unemployment, which in all cases is an evil, and which, when it reaches a certain level, can become a real social disaster….obligation to provide unemployment benefits, that is to say, the duty to make suitable grants indispensable for the subsistence of unemployed workers and their families, is a duty springing from the fundamental principle of the moral order in this sphere, namely the principle of the common use of goods or, to put it in another and still simpler way, the right to life and subsistence.”

And what about other social benefits, including health care?

“Besides wages, various social benefits intended to ensure the life and health of workers and their families play a part here. The expenses involved in health care, especially in the case of accidents at work, demand that medical assistance should be easily available for workers, and that as far as possible it should be cheap or even free of charge….A third sector concerns the right to a pension and to insurance for old age and in case of accidents at work.”

Just something to keep in mind.

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30 Comments
  1. June 29, 2010 9:21 am

    Dip that in your cup and steep it.

  2. Bruce in Kansas permalink
    June 29, 2010 9:33 am

    Okay, but as I understand it, these are folks who have been receiving unemployment beneifts for twelve months. Isn’t the argument that there are people who are not going to work at ($7.25) minumum wage, which is $290/week because they are staying home and collecting $310/week?

    At some point in time, isn’t it incumbent on the person to just get to work at anything?

    • M.Z. permalink
      June 29, 2010 9:47 am

      these are folks who have been receiving unemployment beneifts for twelve months.
      These are folks who have received anywhere from 26 to 99 weeks or UE.

      At some point in time, isn’t it incumbent on the person to just get to work at anything?
      I’ll have to remember to send you a Christmas card.

  3. June 29, 2010 9:43 am

    I think the argument, Bruce, is that the crisis is far from over, with demand still depressed. And jobs always lag the recovery.

  4. David Nickol permalink
    June 29, 2010 10:07 am

    At some point in time, isn’t it incumbent on the person to just get to work at anything?

    My father used to ask how there could be unemployment when there were all those jobs advertised in the paper. The answer, of course, is that there are several unemployed people for every job advertised.

    The number of unemployed for May of this year was 15 million. Do you suppose there are actually 15 million jobs out there going unfilled because people would rather collect unemployment? Even if we could expel the 12 million illegal immigrants in the country and give their jobs to unemployed Americans, it still wouldn’t amount to 15 million jobs.

    Also, if you are a skilled worker, there may come a point at which you feel you need to take a job flipping burgers, but this means that you are a skilled worker competing with people whose job prospects are much more limited than yours. You will also be harming your prospects to continue the career in which you are experienced.

    The fact of the matter is, there really are recessions (and depressions) during which people can’t find jobs. It’s not that they just can’t find jobs that are good enough for them, or they can’t find jobs that pay more than unemployment. They can’t find any jobs.

  5. Bruce in Kansas permalink
    June 29, 2010 10:12 am

    I don’t understand the Christmas card comment. Is it supposed to imply I am somehow insensitive to the problems facing the unemployed?

    I don’t think I was suggesting everything is wonderful and everyone receiving umemployment is a deadbeat. My point is the Church’s principles quoted here are not exactly being being ignored. The unemployment compensation system does seem to adhere to the principles of the Church – only with a cutoff. Ninety-nine weeks does seem like a pretty reasonable amount of time to find a job.

    Since the recovery varies in different regions of the country, perhaps cut-off of benefits could be tied to a relocation stipend.

    Not my area of expertise, but anyway, the quotes of the Church’s teachings seemed to overlook some of the context.

    As usual, I learned something as well. Thanks.

    • M.Z. permalink
      June 29, 2010 10:54 am

      Is it supposed to imply I am somehow insensitive to the problems facing the unemployed?
      Yes.

      Ninety-nine weeks does seem like a pretty reasonable amount of time to find a job.
      Understand that failing to renew the package cuts off people at 26 weeks. To get personal, I will be transitioning to Tier 1 extended unemployment in two weeks, or at least I would have been if this had passed.

      As for minimum wage jobs, nobody is interested in hiring me for entry level work. My guess is that the prevailing assumption is that I would cut and run once the economy has recovered.

  6. Cyn permalink
    June 29, 2010 10:37 am

    If we had an administration that understood economics, maybe we would not have a need to extend unemployment benefits. The policies they are imposing are just not working.

  7. Rodak permalink
    June 29, 2010 10:51 am

    Anybody living on unemployment insurance is living on a maximum of half of what he was living on when he was working.
    (Try that sometime and see how it works with your comfort level.)
    Moreover, he has to have been holding down a previous job in order to qualify for insurance, which demonstrates already his willingness to work, if he can find a job.
    As a person who has been caught in recessions, and laid-off as a consequence, on three separate occasions between the 1970s and today, I am quite confident in telling you that the majority of the people receiving an unemployment insurance benefit would much rather have a job.
    If, however, you take a job washing dishes for minimum wage, perhaps for less money than you were receiving on unemployment, you are: a) not out looking for a “real” job; b) taking a low-level job away from someone who is qualified for nothing better; and c) doing nothing to advance your own cause in the support of yourself and your family.
    I could go into more detail here on why you can’t just “take any job,” but if you can’t see why that is, nothing that I can say will probably convince you.
    Unemployment compensation is not welfare. In the case of a welfare recipient, I would agree: any job is better than that. This in almost never the case, however, with a person receiving unemployment.

  8. David Nickol permalink
    June 29, 2010 10:55 am

    Cyn,

    I think we have an administration that understands economics. However, they also understand politics and realize that what they should be doing — more stimulus spending — would be difficult, if not impossible. Extending unemployment benefits is precisely the kind of thing the government should be doing, even setting aside compassion for the unemployed.

  9. R. Rockliff permalink
    June 29, 2010 11:29 am

    Are there “bums” who could work, but who choose not to work, and who are parasites on those who do work? Of course there are. However, just because there are people in that category does not mean that everyone who is receiving unemployment benefits is in that category.

    It is a fact that “over-qualified” people are at a disadvantage when competing for low-skill low-pay jobs. Employers do not want to hire someone who is likely to quit soon, because this places them in the situation of having to go through the ordeal of getting by understaffed, interviewing, and training all over again. An “over-qualified” employee is likely to quit soon, because such an employee does often get fed up with the humiliation or find a better job. Thus, employers do indeed often pass over the best qualified applicants. If you are one of these, and if there are nothing but low-skill low-pay jobs available, then you are indeed out of luck, and perhaps cursing all the money and effort you wasted on your education. Such is life in America these days.

    Logically, unemployment benefits should be lower than minimum wage, and minimum wage should be high enough to support a person. But, since we enjoy the blessings of freedom, we do not need to worry that we will ever see anything like that.

  10. Cyn permalink
    June 29, 2010 12:10 pm

    David:

    Stimulus spending by the government does not create jobs; productivity creates jobs. The government does not create anything it just uses resources. Without production, the government will not have funding in the form of tax revenue. To find the additional revenue, it will need to borrow from foreign countries such as China and increase our budget deficits. With our debt to China, we are beholden to their demands. Since China is a communist country known to persecute Christians, I would rather the administration seek to encourage productivity for job growth.

    President Obama was encouraged to cut the deficits in Toronto by the European countries. Europe dabbled at socialistic policies and they are not working. The Obama administration should try a different theory of economics. Keynesian Economics did not pull this country out of the Great Depression and will not work for our current situation.

    Furthermore, stimulus spending is only a temporary fix to create jobs. When subsidies end, the jobs end. Only productivity will maintain a workforce.

  11. June 29, 2010 1:53 pm

    Cyn,

    I find you comments most ironic, given that – as David notes – we finally have an administration that understands the basics of economics, rather than the mindless Reaganite slogans that bankupted the country and almost pushed the world into another Great Depression.

    Where are you getting your analysis? For without knowing its genesis, it is really quite difficult to respond. For a start, you are confusing supply and demand. This recession is demand-induced, and just like the Great Depression before it, has thrown up a liquidity trap – meaning that people are holding cash our of fear, and nobody is spending, which has all kinds of ripple effects throughout the economy. Normally, monetary policy is the first line of defense but monetary policy doesn’t work so well in a liquidity trap, and anyway, interest rates are practically.

    It is precisely in circumstances like this that fiscal policy comes into play. Indeed, it is the only way to save economy – only a boost in public demand (deficits) can reduce the severe decline in private demand.

    As noted by Martin Wolf of the Financial Times, “between the fourth quarter of 2007 and the second quarter of 2009, the balance between US private income and spending shifted from a deficit of 2.1 per cent of gross domestic product to a surplus of 6.2 per cent – a swing towards frugality of 8.3 per cent of GDP.” Think about that. If the public deficit had not widened by a similar amount, the economy would simply have collapsed.

    A great debate going on today is whether fiscal consolidation or providing continuing support to the recovery from fiscal policy makes sense. Countries under pressure from markets (really high borrowing costs) – like Greece and Spain – have no option but to cut deficits today. But countries like the US can wait – interest rates are still at an all-time low. When the recession is over, then you cut back the stimulus. That is the great lesson of Keynes, and it has nothing to do with “socialistic policies” (whatever you mean here) or productivity. Incidentially, the only big spike in productivity since the 1970s came under the Clinton administration – Reagan’s “supply side” policies had no effect on supply, but they certainly maade the rich richer and the world more dangerous.

    See here for more.

  12. Mark Gordon permalink
    June 29, 2010 3:36 pm

    MM, isn’t the danger that a Keynesian stimulus, far from being temporary, just raises the base level of government spending, creating a structural deficit as far as the eye can see?

    Another question: Don’t you think the remarkable flight to gold that we’ve seen lately indicates that people are not, in fact, holding onto their cash, but instead are convinced that their cash will be worthless in the very near future? In other words, isn’t inflation the only way out of the debt corner we’ve backed ourselves into?

  13. Frank permalink
    June 29, 2010 4:14 pm

    Job outsourced to India

    Unemployment benefits cut off

    2 pink lines on the dipstick this morning.

    Hmmm…. what to do?

  14. David Nickol permalink
    June 29, 2010 4:37 pm

    Stimulus spending by the government does not create jobs; productivity creates jobs.

    Cyn,

    See Jobless Producing U.S. Profit on Higher Productivity from Bloomberg Businessweek.

    U.S. productivity gains averaged 2.9 percent from 2000 through the first quarter of 2010, compared with 2.1 percent in 1990-1999 and 1.5 percent in 1980-1989, according to the Labor Department. The increased efficiency has helped improve earnings, with more than 80 percent of companies in the S&P 500 index reporting profits that exceeded the consensus analysts’ estimates during the most recent quarter, Bloomberg data show.

    Keynesian Economics did not pull this country out of the Great Depression and will not work for our current situation.

    Of course it did, in the form of massive government spending for World War II. From Wikipedia:

    The common view among economic historians is that the Great Depression ended with the advent of World War II. Many economists believe that government spending on the war caused or at least accelerated recovery from the Great Depression. However, some consider that it did not play a very large role in the recovery, although it did help in reducing unemployment.

    The massive rearmament policies leading up to World War II helped stimulate the economies of Europe in 1937–39. By 1937, unemployment in Britain had fallen to 1.5 million. The mobilization of manpower following the outbreak of war in 1939 finally ended unemployment.

    America’s late entry into the war in 1941 finally eliminated the last effects from the Great Depression and brought the unemployment rate down below 10%. In the United States, massive war spending doubled economic growth rates, either masking the effects of the Depression or essentially ending the Depression. Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output to take advantage of generous government contracts.

  15. June 29, 2010 4:46 pm

    Mark:

    (1) I disagree. I actually think it is the tax cut element of the stimulus that has the most staying power, as people are more attached to lower taxes than to higher spending. Much of the spending stimulus will expire automatically – relief to the states, unemployment benefit extensions, even infrastructure investments (although that could take longer). In a sense, the stimulus in the US mirrors automatic stabilizers in Europe, as these stabilizers (from welfare states and progressive income taxes) are much smaller here. Already, we can see the stimulus being unwound – too soon at the state level, and planned at the federal level for an adjustment beginning in 2011.

    (2) The flight to gold might indeed represent a fear of inflation. Personally, I think that a little inflation would not be that bad, but here’s the problem – we see absolutely no inflationary pressures anywhere in the world, with the possible exception of some dynamic countries like China and Brazil. Rather, the risk in many countries, especially in Europe, is something far worse – deflation.

  16. Mark Gordon permalink
    June 29, 2010 6:02 pm

    Good answer. Thanks.

  17. Magdalena permalink
    June 30, 2010 7:39 am

    I’m sympathetic, believe me I am, but doesn’t there come a time when the benefits have to be stopped? Who knows how long this crisis is going to last – nobody in charge seems to know what they are doing and instead of things getting better we’re looking down the barrel of another crash. The people I know who work in finance personally managing billions in assets have been telling me everyone knows something is terribly wrong with the “recovery” but they are too afraid to talk about it in public due to fears of setting off another panic. But you’d better believe they are talking about it in private and making arrangements appropriately.

    If unemployment stays this high for five years – as it might – or ten years – as let’s face it, it might, if our leaders can’t get it together – do we keep people on unemployment benefits for five or ten years? You have to draw the line somewhere… but wherever you draw the ilne, it hurts.

    PS The idea that massive government spending w/ WWII was what ended the Great Depression is the orthodox historical interpretation and while it likely played a role, it over-simplifies tremendously and there is no consensus opinion on it, as the Wikipedia itself states.

  18. June 30, 2010 7:57 am

    doesn’t there come a time when the benefits have to be stopped?

    That’s easy – when the person finds a job or takes part in training or education. The right to unemployment benefits is not a time-limited right.

  19. Rodak permalink
    June 30, 2010 8:06 am

    The benefits can be stopped when the recipient has no further need of food, shelter, and clothing. And neither have his dependents, if any.

  20. Kurt permalink
    June 30, 2010 8:25 am

    Unemployment Insurance is a social insurance program. Premiums are paid into a trust fund from which benefits are drawn. Workers earned credits that bring them to vesting in the program. The amount of premium paid determines the size of the benefit up to a cap. Following the principle of subsidiarity, it is a joint federal-state program with the administration on the local level.

    It is a long standing aspect of the insurance program to alow for extended benefits during times of high unemployment when workers cannot be reasonable expected to find work.

  21. M.Z. permalink
    June 30, 2010 8:39 am

    As libertarian Megan McArtle wrote:

    We’re not simply trying to move people into the ample supply of new jobs faster; there is no ample supply of new jobs. Rather, we’re shuffling a limited number of job openings between a much larger number of people. In a game of musical chairs, there’s no cost to letting the music play longer; you’re still going to end up with the same number of people sitting on the floor.

    If you’d rather hear it in jargon: until the supply side improves, we don’t need to worry much about demand-side disincentives.

  22. June 30, 2010 9:36 am

    On the subsidiarity point, one way to push this further would be for the unions to administer social security funds, as happens in some European countries. Of course, when it comes to unions, many American Catholics forget about their zeal for subsidiarity…

  23. June 30, 2010 9:54 am

    M.M.:

    The intention of unemployment benefits is to carry a worker across a period of temporary unemployment. If I’m the world’s best and highest paid audio-tape deck maker, but the world doesn’t want audio tape anymore because technology has moved to other ways of recording music, it doesn’t make sense to keep my family afloat with “unemployment benefits” because I won’t be employed again until I learn a different skill. Nor does it make any sense to cut off support when I finally face the music and decide to learn a new trade.

    The world faces unprecedented rates of change as technology progresses and as workers everywhere compete individually and collectively for work. Rather than claiming “rights” that maintain the status quo (or appearance of it), we should support rights that keep everyone healthy and able to take advantage of changing opportunities. (I almost wrote: “capitalize on new opportunities” but that would probably be mis-interpreted!) (Another side note: I started my professional career designing vacuum tubes, and I could continue doing that, but I’ve learned other ways to support my family.)

    Letting go of the status quo and an outdated self-image is an act of renewal and a spiritual exercise, primarily for the employee re-starting a career but also for the employer who’s willing to take a chance on someone’s ability to learn. See, for example, What Color Is Your Parachute>? IMHO government-sponsored health care supports this from both ends, since the employee isn’t tied to a specific employer to keep health care, and the employer faces less cost and risk in hiring someone.

  24. Magdalena permalink
    June 30, 2010 10:09 am

    It’s a good point that it is an insurance program, not part of the welfare system. One of my best friends has been unemployed for eight weeks and refuses to apply for benefits because she is mistakenly convinced that it is a “hand-out.” Leaving aside that hand-outs are perfectly justifiable to help the unemployed provide for their families, it’s not even a hand-out! These are benefits we all pay for when we are working and it’s only fair to take advantage of them when we need them. I doubt my friend would refuse to collect on her husband’s life insurance policy if God forbid he passed away. But somehow she’s convinced herself this is different.

  25. dan permalink
    June 30, 2010 10:44 am

    “we finally have an administration that understands the basics of economics, rather than the mindless Reaganite slogans”

    Let’s be careful not to let pet partisan proclivities make one naive. In many ways, the Obama administration is a continuation Wall Street Inc:

    http://www.pbs.org/wgbh/pages/frontline/warning/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

    Rahm Emanuel made a ton of money as an investment banker and served on the board of Freddie Mac during part of the go-go 2000s.

    And then there is Penny Pritzker and her money machine behind the Obama campaign:
    http://www.infozine.com/news/stories/op/storiesView/sid/27257/

    Probably a good thing that progressives and conservatives spoke up in late 2008 or she would have found a top spot in the administration.

    When the Obama administration comes to a close in 2012 or 2016, the president will have a future before him that will be full of wealth and material possessions.

    “I could go into more detail here on why you can’t just “take any job,” but if you can’t see why that is…”

    Is this a proper Christian perspective and attitude towards work and providing for one’s family? Or is it our materialistic ways informing this thinking?
    I ask because I see people in our community “taking any job”, especially so-called illegal immigrants who bust their humps to provide for love ones.

  26. Rodak permalink
    June 30, 2010 1:33 pm

    I doubt that your so-called illegal immigrants have a mortgage, maybe a kid in college, maybe a pile of medical bills, a couple of car payments, etc. If a laid-off professional takes the minimum wage job, where then does your illegal immigrant find subsistence level work?

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