Side effect of extending unemployment
Tuesday, July 20th, 2010Now that Senator Byrd has been replaced, the Democrats have the votes (along with the two Senators form Maine) to pass an extension of unemployment benefits.
This is, of course, good for people who are currently unemployed and cannot find a new job in a down economy.
It does have a side effect though. For those who do not know, the unemployment rate is calculated by using the “workforce” as a group of all those people who are working and those who are actively looking for a job. How do they determine who is actively looking for a job? They count those on unemployment. So adding those who are working and those who are unemployed makes the workforce, and the unemployment rate is the percentage of all those people who are collecting unemployment.
So the side effect of extending unemployment is that it extends the amount of time that people would still be counted in the workforce. Had the Democrats not passed any unemployment extensions, the unemployment rate would be much lower. This, of course, doesn’t mean that there would be more people with jobs. It would just mean that there would be more jobless people who are not counted.
So keep that in mind when people are critical of Obama for having a higher unemployment rate than we would have under a Republican Congress and President. The reason is not because the Republican policies are better. The reason is because the Republicans would make sure that less jobless people are included as part of the workforce.

