Unemployment Benefits

Are people using their unemployment benefits to put off looking for work? Probably. Does it matter? Probably not.

Consider this - assume there are enough resources to feed 500 people in a town of 2500. ( not coincidentally, this is also about the ratio of job openings to job seekers.). Now let's say the government steps in and distributes some of that resource, or a suitable replacement. What may happen is some townspeople stop going out to collect that resource since they are now being supplied. The problem is STILL the resource shortage, not the fact that the townspeople have stopped going to collect it.

It is much the same for jobs. If we were facing a shortage of workers, we would see wages creep up to attract them. This is not occurring, which tells me that whether people seek work on unemployment or not is irrelevant. The fact is, as long as job openings are much fewer than job seekers, continued unemployment benefits are the best way to keep money flowing. The cbo agrees:

see page 9 here:
http://cbo.gov/ftpdocs/113xx/doc11353/3-17-10-NLGA.pdf