The Undeserving Unemployed

Nancy Folbre is an economics professor at the University of Massachusetts Amherst 

Maybe they don’t deserve assistance. Or maybe they don’t deserve unemployment. Attitudes toward the approximately 10 percent of our labor force that is actively seeking work and not finding it have become a defining feature of our political landscape.

Fierce and intensely partisan disagreements over the extension of unemployment benefits are blowing up on Capitol Hill.

Long-term unemployment, a jobless period of six months or longer, has reached a historic high. In March 2010 more than 44 percent of the unemployed fell into this category.

Whose fault is this? Some argue that wages in the United States are too high. If everybody would just agree to work for less – or if employers were gutsy enough to cut wages – we could solve the problem. Just let the forces of supply and demand do their job!

Unfortunately, as John Maynard Keynes pointed out, both unemployment and falling wages lower consumer demand and can lead to even greater unemployment.

A more popular view (especially among Republican members of Congress and on the opinion pages of The Wall Street Journal) lays the blame squarely on government itself. Extended unemployment benefits and other means-tested programs can undermine incentives to work.

Evidence suggests that individuals do prolong their job search when they receive unemployment benefits, partly because they are looking for the best possible job. But the magnitude of this effect is likely to be small.

A recent study by Rob Valletta and Katherine Kuang, economists at the Federal Reserve Bank of San Francisco, compared lengths of unemployment among those eligible for unemployment insurance with those who were not eligible. Their statistical analysis suggests that extended benefits accounted for only four-tenths of 1 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the last few years.

Do numbers like these influence the Congressional debate? They should, but they seem to pack less punch than more primal underlying emotions. How do people with jobs feel about those who are trying to find one, but can’t?

Some studies, such as those showing that long-term unemployment causes emotional anguish as well as economic stress, may elicit sympathy.

On the other hand, it’s not hard to find articles emphasizing that the long-term unemployed are lucky to have so much free time, or suggesting that they’re better off than they were in previous eras because they are more likely to have a working spouse.

In other words, maybe the unemployed and those who are most worried about them should just stop whining.

The moral and emotional tenor of the debate over extending unemployment benefits is consistent with psychological research showing that we all like to believe that people generally get what they deserve. We tend to have a high opinion of individuals who receive fortuitous rewards, and a low opinion of individuals who are victims of bad luck.

Melvin Lerner, the psychologist best known for his book, “The Belief in a Just World,” considered this belief a delusional means of avoiding moral discomfort.

The economists Roland Bénebou and Jean Tirole argue that however delusional the belief in a just world may be, it can be economically advantageous. Individuals who believe they will inevitably be rewarded for their effort and initiative are likely to exercise more discipline and self-control than those who don’t.

Professors Bénebou and Tirole observe that the belief that individuals always get what they deserve is stronger in the United States than in European countries with more redistributive public programs. Indeed, they argue that this belief helps explain why our policies are different (though the causality can run both ways).

They also argue that our policies reward merit more effectively – even if they are harder on the poor (and, presumably, the unemployed). But Professors Bénebou and Tirole don’t offer much support for this lofty claim. Nor do they consider the possibility that meritocracy might be undermined by trends toward increased income inequality and long-term unemployment.

Belief in a just world is not a self-fulfilling prophecy. While it may bolster individual effort, it can also undermine collaborative efforts to make reality conform a little more closely to our ideals of justice.

Posted via email from Jim Nichols