Imagine that you need to find a neighborhood kid to mow your lawn.
You bang on three different doors, but none of the kids want to come outside. You learn that the parents at all three houses are paying their children to "house sit". The kids could make a little more money mowing yards than house-sitting (i.e. - doing nothing) but not much. It's not worth their while to get up and mow yards just for an additional, say, $1.00 per hour.
For you, the frustrating thing is that all three groups of parents owe you money. They are using your money to pay the kids to sit and play video games, watch TV, and surf the internet all day.
So you either mow your own yard or you hire a lawn service whose employees are already putting in 60 hours a week.
I've been unemployed before, once for about 4 weeks. It wasn't fun, but it was comfortable. I went to the unemployment office downtown, filled out some paperwork, and then checked my mailbox for a check every week.
I made a few efforts to find jobs that paid as much as the one I had lost. There were none.
Every two or three days I put on a suit and made the interview rounds, but The Cooking Channel beckoned. Blockbuster Video had tons of movies I'd not yet rented. Short trips to the lake were suddenly possible every day.
Various companies offered me jobs that were almost exactly the amount of my unemployment compensation. But why in the world would I want to take one of those and work for 40 hours a week when I could get the same amount by staying at home and learning how to cook Peking Duck and watching old episodes of Monty Python? Where were the incentives?
The incentives eventually came in the form of Mrs. Whited, who told me to take a job, any job, because she was tired of coming home from working all day and seeing me unshaved, unwashed, and on the couch.
I took a job that paid around .75 cents an hour more than my unemployment compensation. Within about a year and a half, I was up to my old salary again.
But man, it was hard to tear myself away from cable TV, Blockbuster Video, and the lake.
I've interviewed three different people in the last month who knew that the jobs I was trying to fill were perfect for them. They knew that they would fit in well. They had friends who worked for me. They were perfect for what I needed.
But dammit, the government was also paying them (with your money) to sit at home. The government's pay rate is about 80% of what I offer to start at some of those jobs.
Unemployment insurance is a good thing. But when it is automatically extended and extended and extended, just to show how compassionate politicians are in an election year, it can totally destroy incentives. But get ready for a barrage of political ads denouncing the evil meanies in Congress who voted against extending unemployment benefits through the end of The Obamessiah's term.
Hope everybody had a good 4th. I'm gonna go get they guys started in one of the warehouses and then see if I can find a kid to mow my yard.
Addition: Go here to see a totally different point of view from The Obamessiah's pet journalist/economist Paul Krugman. Mr. Krugman neglects to mention the root cause of so much of the unemployment we're seeing - The Teleprompter Jesus demonizing employers, forcing corporations to become nannies, and demanding that those who put their capital at risk pay even more tribute money to Washington if they're succesful.
I've been able to see things from Paul Krugman's point of view a few times in the past, but it was uncomfortable having my head that far up my ass.