Being unemployed is no joke. We are talking about peoples’ livelihoods, their ability to provide for the families and in many cases their identities. Unfortunately some unemployment, even in an economy functioning in full throttle is inevitable. However, the present economic situation is anything but full-steam ahead. With unemployment approaching double-digits, we are talking about many millions of Americans in this predicament.
Insensitive Comments
There is tremendous pressure on Congress to come up with solutions to the rampant unemployment. It’s too bad that some folks in Washington have made some asinine comments regarding the unemployed and the wisdom of unemployment benefits. Some have even gone to the extent to suggest that people would rather collect the benefits rather than work. I have been on these benefits before and let me tell you that they are barely enough to provide the absolute necessities of life. It’s even harder if you have a big family to support, as they get a little more, but certainly not enough to be able to just sit back and live fatly off the benefits.
Not only are such comments moronic, they also don’t make much economic sense. Obviously all parties would rather have the person working and earning a full salary. But unemployment benefits serve an economic purpose as well. Our economy is driven by consumer spending. In fact 70% of Gross Domestic Product (GDP) is comprised of consumer spending. Almost all of the money received by the unemployed gets spent, thus directly helping GDP. This isn’t just my opinion, it is based in economic reality.
MPC
There is an economic term called “The Marginal Propensity to Consume.” It sounds complicated, but it is a fairly easy concept. It measures the percentage of one’s income that he is likely to spend. For example, if you earn $1000 and spend $800, your MPC is 0.8 or 80%. The MPC of unemployment benefits must be in the 90% range although I haven’t been able to locate the exact statistic. I don’t think the purpose of issuing unemployment benefits is to stoke the economy, but this is a positive benefit of doing so.
I don’t want to get too political but this has become a big political issue. It’s tiresome for politicians to make comments without fully understanding the situation and for political gain. Unfortunately that won’t change anytime soon.
Weighing in on Unemployment is an article from: 
