Cutting out benefits can reduce the jobless rate in two ways, says Mr. Feroli [Michael Feroli, chief U.S. economist at J.P. Morgan], pointing to past economic literature. Under the employment effect, people will take jobs even if the work pays less than the job seekers want. In the participation effect, people will drop out of the measured workforce since actively seeking a job (a criterion for being labeled officially unemployed) no longer carries an advantage of receiving jobless benefits.
Read more at What Happens When Unemployment Benefits Are Cut? North Carolina Offers a Clue – Real Time Economics – WSJ.
First of all it is interesting that a bank like JP Morgan can somehow justify cutting public benefits when one of JP Morgans top growth industries is administering Treasury benefits like food stamps(SNAP) and things like carbon credits. Too bad JP Morgan was bailed out along with the rest of the US banking sector. Still … what makes Mr Feroli automatically conclude that these North Carolina benefit cutters sought work? Is it possible they got on other welfare?
Interesting that the JP Morgan guy Mr Feroli does not recall a partial reason for the drop that he wrote about in a prior article, entitled “2.2 MIllion Go On Disability”. Since then the real number is closer to 2.6 million. In that article it estimates that if 10% of the SSDI was cut due to more rigid policing of fraud then the US unemployment rate would be at 9.9%.
FRED: http://tinyurl.com/nta4qqu
Also note that there are right now 28.6 million Americans on disability. That is 1-in-11 Americans. Next time you come to America count 10 people and the eleventh one will be on disability. There are only 23 million people in Australia, so that’s like flying to Australia and getting off the jet and the airport is empty and nobody is working in the entire country. Add in the 47 million(1-in-7) Americans who cannot afford to eat without government assistance. You start to get an idea as to who it is that will ultimately pay for Obamacare.
Reality is that the net debt at the US Treasury increased to $530BIL for FY2014 on Dec 17th, while total YTD tax revenues were only $514BIL. On a “pay-as-you-go” basis the US Treasury has more debt than revenues. In some non-FASB lingo that would be called “insolvent”. I hear that Australia eliminated its debt ceiling(limits). Here in America our politicians aren’t that honest, we only suspended it, but they may as well eliminate it.
Would that political tactic influence the AUD?
LINK: http://finance.townhall.com/columnists/mikeshedlock/2012/05/06/22_million_go_on_disability_since_mid2010_fraud_explains_falling_unemployment_rate