Federal Reserve Chairman Alan Greenspan today endorsed extending unemployment benefits for workers who have exhausted them, but also predicted that job growth should pick up "more quickly" as the economy keeps expanding.
Congress has acted three times since the 2001 recession to provide jobless workers with an extra 13 weeks of benefits beyond the 26 weeks provided by the states. But lawmakers let the last extension expire in December amid partisan rancor.
"I think considering the possibility of extending unemployment benefits is not a bad idea," Greenspan said in response to questioning at a hearing of the House Committee on Education and the Workforce. He added that he has supported such extensions before, "in times like this."
The average length of unemployment grew to 20.3 weeks in February -- the highest in more than 20 years -- from 19.8 weeks the month before, the Labor Department reported Friday. Nationally, job growth essentially stalled over the last three months.
Democrats have tried unsuccessfully to extend benefits further. But congressional Republicans have said another extension is unnecessary because the economy is gaining momentum and better job growth is imminent.
"I think it strengthens our hand" in pushing for another extension, Rep. George Miller (D-Calif.), the ranking minority member on the committee, said of Greenspan's comments. "He's the oracle of the economy. . . . Historically, the Congress has paid a lot of deference to his statements."
Committee Chairman John A. Boehner (R-Ohio) did not comment directly on the extension issue, but said in a written statement after the hearing that, as of January, the states collectively "were sitting on $5.4 billion of the $8 billion in unemployment benefits provided in March 2002."
Greenspan's comments came after he had told committee members that "new job creation is lagging badly" despite strong economic growth. But he said, "In all likelihood, employment will begin to increase more quickly before long as output continues to expand."
Miller said later that he interpreted Greenspan's support of another benefits extension as "also telling you he doesn't expect many jobs to be created in the next six months."
The weak job market has emerged as a top concern among voters this election year. Democrats, noting that the nation has 2.2 million fewer jobs than when President Bush took office, blame Republicans for not doing enough to protect American jobs and help the unemployed. Republicans credit Bush's tax cuts for stimulating a strong economic recovery in recent months, which they say will soon bloom into vigorous job growth.
The economy grew at better than a 6 percent annual rate in the second half of last year, and appears on track to expand by more than 4 percent this year -- rates that traditionally have spurred businesses to hire new workers to meet rising demand. But businesses have been able to produce more goods and services without hiring many new workers, reflecting stunning improvements in efficiency.
Greenspan noted that many Americans worry about the long-term loss of manufacturing jobs to low-wage economies in Asia and Latin America, and the more recent outsourcing of better-paying white-collar jobs to countries like India.
"Job insecurity is understandably significant when nearly 2 million members of our workforce have been unemployed for more than six months," the Fed chairman said.
But he implored lawmakers not to respond by restraining trade, as many industries, labor groups and candidates have proposed.
"As history clearly shows, our economy is best served by full and vigorous engagement in the global economy," he said, repeating a message he has delivered many times in recent months, as such proposals have proliferated.
Greenspan noted again that U.S. incomes have risen over time, on average, "whether we had a trade deficit or a trade surplus and whether international outsourcing was large or small."
The Fed chairman did not mention any specific proposals, but referred to protectionist measures generally as "alleged cures" that "would make matters worse rather than better."
Greenspan said the nation would do better to focus on continuously improving education to help workers keep pace with an increasingly "conceptual" economy, in which new ideas rather than tangible objects account for a growing share of goods and services.
"Time and again through our history, we have discovered that attempting merely to preserve the comfortable features of the present, rather than reaching for new levels of prosperity, is a sure path to stagnation," Greenspan said. |
