Do the Math, AP

The AP puts a nice spin on the CBO’s extension of unemployment benefits report with this cheery title:

Report: Extending jobless benefits creates jobs

Extending the current level of long-term unemployment benefits for another year would add 300,000 jobs to the economy, according to a report from the Congressional Budget Office.

But everything has a price, and extending those benefits will cost us a cool $30 billion. For one year.

The analysis released Wednesday from the nonpartisan office estimates that keeping jobless benefits would cost the government $30 billion. But it would also lead to more spending by the unemployed, boosting demand for goods and services and creating new jobs.

Hint to AP reporters: there’s this cool mathematical trick called “division,” and this “division” can tell us how much money it will cost us per job. And the answer is….

$100,000

But it gets worse.

That 300,000 jobs number only applies to the fourth quarter of 2013, and it’s that high due to some sort of time period futzing the CBO did. Their real rule of thumb is that for every $1,000,000 of unemployment benefits, we’ll get 6 jobs. So, once again using this mysterious “division” legerdemain, we can figure out what we should expect, on average, as opposed to their cherry-picked 4th Quarter. And that answer is……

$167,000

Which means that on average we’ll get an extra 180K jobs in 2013. Which is what we’d get from one decent month of job creation.

Of course these jobs are a bonus – after all, the primary goal of unemployment benefits is to keep people fed. But the economic stimulus portion of unemployment insurance seems vastly overrated. Especially when the CBO admits it hasn’t included the cost of servicing the additional debt, and they never include the impact of government borrowing on the availability of capital for private enterprise.

The humanitarian argument for extending unemployment benefits is fairly strong, but the economic stimulus argument is laughable.