Can We Fix America's Broken Unemployment Insurance System?

Summary

Podcast Summary: Optimist Economy

Episode: Can We Fix America's Broken Unemployment Insurance System?

Hosts: Kathryn Anne Edwards & Robin Rauzi
Date: September 30, 2025

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Overview

This episode dives deep into America's unemployment insurance (UI) system—how it functions, why it's so broken, and what an ambitious, effective alternative might look like. Drawing from their expertise, especially Kathryn’s academic background and policy experience, the hosts break down the fundamental flaws in the UI program, its historic evolution, the perverse incentives undermining it, and bold ideas for systemic reform. The conversation is practical yet idealistic, balancing economic reasoning with a sense of what's humane and constructive for workers, businesses, and society.

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Main Discussion Points & Insights

1. Revisiting Listeners' Feedback and Clarifications

• Retconned Segment: Kathryn revisits a past episode about the Baby’s First Year cash study. She clarifies that most recipient mothers were already working full time:

  “So the conclusion that we shouldn't give women cash, we should just help them find jobs, like really doesn't apply to this group ... Most of the moms were working and if they were working, they were working full time.” (01:23)

• The real requests of low-income mothers were family-friendly work policies, better childcare, and safe recreational spaces for children—not simply more cash.
• Tone: Kathryn and Robin dismiss common tropes about “handouts” vs. “hand-ups,” noting the persistent blind spots in policy debates.

2. Defining Unemployment Insurance: Terms and Structure

• Unemployment insurance (UI) is a Social Security-era social insurance program funded via payroll taxes—entirely by employers.
• Each state runs its own system, leading to massive inequality in benefits.
• The UI program is meant as “layoff insurance” (not general unemployment insurance), only available to those laid off "through no fault of their own."
• Key Quote:

  “It's a similar model to Social Security, but much worse, because instead of being run by a federal agency, it's run individually by each separate state government... If you put that on a timer for 70 years, do you think it would be good or bad? Bad. The answer is bad.” (07:29)

3. State-by-State Disparity & Racial Inequity

• Example: In Massachusetts, weekly UI benefits can exceed $1,000, while in Louisiana they’re around $230.

  “It’s shameful... the average white benefit and the average black benefit were a thousand bucks off over the course of an unemployment insurance spell.” (13:34)

• States with higher Black populations tend to offer the lowest benefits.

4. How the State-Federal Structure Creates Neglect

• Most states avoid increasing UI benefits or taxes due to political unpopularity.
• Political neglect is rampant; some governors even pride themselves on slashing the program.
• Federal intervention has become routine in every recession since the 1950s.

5. Incentives, Business Lobbies, and the “Experience Rating” Trap

• “Experience rating” means companies with more laid-off workers face higher UI taxes; this discourages businesses from allowing claims (not layoffs) to go through.
• Third-party firms (like Equifax Workforce Solutions) help employers contest or delay UI claims, effectively shutting out eligible unemployed workers.

  “The only way to save money on unemployment insurance is to prevent people from getting it who are eligible.” (25:10)

• There’s little permanent advocacy for UI improvements, while businesses remain a constant lobby against higher taxes and benefits.

6. History of Reform Failures and Recession Lessons

• Commissions in the 1970s and late 1990s repeatedly called for federal minimums, automatic adjustments, and modernization—recommendations consistently ignored.
• Recessions deplete state “trust funds.” States often choose to cut benefits rather than raise taxes, despite federal urging.
• Federal expansions (e.g., during COVID-19) reveal the inadequacy of state systems—they’re never recession-ready.

7. Why the System is Obsolete

• UI was designed for a 1930s-style, factory-heavy economy. Today’s workforce faces different job risks and career patterns.
• The program’s reach is shockingly limited:

  “Typically at most half [of eligible people] will pick it up. ... Around a quarter of the unemployed are actually getting benefits.” (31:15)

8. What Would an Ideal UI System Look Like?

• Kathryn proposes “starting from scratch.” Ideas include:
  • Replacing the worker-focused UI tax with a business-focused “B2B” trust fund supporting payroll stability (like PPP loans).
  • On the worker side, a tiered UI system:
    • Tier 1: Short-term (2–3 weeks) cash benefits, no questions asked.
    • Tier 2: Requires job counseling/active re-employment steps.
    • Tier 3: Extended help—training, support for longer-term unemployed.
  • Strong labor market data integration; design benefits by demographic and economic realities (e.g., different support for older/younger workers, local job availability).
• Kathryn embraces the evidence that more generous UI leads to longer unemployment spells but insists this is an investment in better job matches and human capital:

  “There is an overwhelming amount of evidence ... the more generous unemployment benefits are, the longer someone will stay unemployed. ... I’m willing to give more money, which could lead to higher unemployment rates, to support and invest in better re-employment for people who are unemployed.” (37:47)

9. Humane Job Search & Labor Law Reform

• Hosts advocate for making job applications more humane:
  • Mandate companies to disclose hiring timelines and reject candidates explicitly (no ghosting).
  • Require companies to pay for interview time and assessments, matching posted wages.
  • Require transparency about whether a human or AI screened applications.
• These reforms would both dignify job seekers and create valuable anti-discrimination enforcement data.

  “Job seekers are treated with such indignity that you could put some laws on their regulation.” (54:30)

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Notable Quotes and Memorable Moments

• On Inaction & Neglect:

  "No governor is like, 'I'm so proud that we're so good at helping unemployed people.'" — Kathryn (10:59)

• On Experience Rating:

  “It is... the worst designed feature of a public program that I have ever encountered.” — Kathryn (25:56)

• On the Need for Reform:

  "Unemployed workers are ephemeral. These businesses are there always. ... These just mayflies of workers who come in and realize how terrible the program is. But then they leave again, and there's no permanent [constituency]." — Kathryn (28:28)

• On Human Capital:

  “If you work at some job and get fired or laid off or quit, and you restart as, say, someone mopping the floors at Starbucks, your human capital... is basically wasted because you’re now in a job where you don’t use it at all.” — Kathryn (40:26)

• On the Current UI System:

  “You just have all those problems, put them on a timer, set it for 75 years, forget it, and you’ll end up with the awful system that we have today, which is completely unprepared for a recession.” — Kathryn (28:57)

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Timestamps for Key Segments

• 01:02 — Retconned segment: Revisiting the Baby’s First Year cash study and clarifying findings about working mothers.
• 05:24 — Transition to the core topic: Unemployment insurance 101.
• 06:09 — Did anything change after COVID-19? (Spoiler: only temporarily.)
• 08:49–13:35 — Extreme state-by-state differences + examples (Massachusetts vs. Louisiana).
• 14:01–16:06 — Racial disparities in benefit provision.
• 17:07–21:14 — Postwar history of UI, “war chests,” and evolution during economic crises.
• 25:37–28:57 — The perverse incentives of experience rating and business interests.
• 30:11–31:39 — Federal intervention & coverage gaps during recessions.
• 34:12–36:43 — Kathryn’s “start from scratch” reform ideas; business- and worker-focused schemes.
• 37:00–41:37 — The case for more generous UI: investing in better job matches and overall productivity.
• 46:42–48:23 — Proposed “tiered” unemployment benefits and progressive program design.
• 51:49–54:30 — Proposed labor regulations for job seekers: notifications, compensation, and anti-ghosting.
• 57:12–57:57 — Congressional briefings and real hope for future reform.
• 58:23–59:18 — Executive orders: No C-suite raises/bonuses after layoffs; only appoint qualified agency heads.
• 61:11–66:14 — Spiritual sponsors: Radiohead’s “No Surprises,” public libraries, and library merch.

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Tone and Takeaways

• Language: Candid, self-deprecating, and wry. Kathryn’s dry policy humor (“Unemployed workers are mayflies...”) is complemented by Robin’s clarifying prompts.
• Optimism: Despite recurring dead ends, the hosts maintain a belief that meaningful change could come if society builds pressure for “formidable unemployment programs,” especially with technological disruption looming.
• Practicality: The episode is rich with specifics—how states undermine UI, the ways business incentives warp eligibility, realistic program design alternatives, and the human cost of a broken system.

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For Listeners: Why It Matters

This episode arms listeners with a frank, illuminating account of why unemployment insurance doesn't work as intended, how political neglect and economic incentives undermine both workers and the economy, and how practical, evidence-based reforms could build real resilience and dignity into the future of labor. The hosts offer both policy specifics and a vision for a system that meets Americans where they are—whether they're in a short job search, navigating a career change, or facing industry-wide shifts due to AI.

“Sometimes the greatest success is built off the lowest bar. And I'll take it.” — Kathryn (58:08)

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[Advertisements, routine announcements, intros, outros, and non-content sections omitted as requested.]

Transcript

[A]

There's going to be a meeting on the Eastern seaboard in the fog with someone from like, Big Cinnamon and Equifax, Workforce Solutions and Starbucks being like, we've got to shut this place down.

[B]

There are 3,000 listeners going to storm the gates.

[A]

Well, hello and welcome to Optimist Economy. I'm Katherine.

[B]

I'm Robin.

[A]

On this show, we believe the US Economy can be better. And we talk about how to get there one problem and solution at a time.

[B]

At the top of the show, we make a few announcements. First, we've added a support us page to our substack. It'll tell you all the ways that you can support our show financially. We have two new spiritual sponsors to shout out this week. First, Monica Dwyer of Ohio and Christopher Moore of Dallas, Texas. Our next chapter is Retconned, retroactive continuity. This is where we talk about things that we should have talked about before. And this is all going to be Catherine this week.

[A]

Yes, that's why Retcon's kind of my section. I wanted to say we published the show on cash and something that I, man, really should have brought up in real time is that in the study most of the moms were working.

[B]

So the, this is the, this is the Cash the Cash for Kids study that was looking at poverty.

[A]

In the baby's first year study. I neglected to mention in the part where we talked about it for a long time that most of the women were working and if they were working, they were working at least 30 hours a week. So the conclusion that we shouldn't give women cash, we should just help them find jobs, like really doesn't apply to this group of women because they had such high work rates. And then we had a listener write in that they felt like the kind of conservative conclusion from the baby's first year study was less that we shouldn't help them, but that mom should help themselves. That point is also hollow because most of the moms are working and if they were working, they were working full time. And so there's this like handout versus hand up doesn't work when you're in a very low paid job like they were. The second thing is that part of the kind of sweeping, comprehensive study that is baby's first year, they, they are part of qualitative studies as well that interview them about their experience receiving the money and, you know, how they spend it and how they feel about it. And for what it's worth, these women have said in the baby's first year program who are getting $333 a month that they want help with childcare. Yeah. And when they think of the type of support they need, they listed out their top three ask were family friendly work policies, child care, and safe recreational activities and spaces for their children. I thought that that was definitely like a very telling and frankly fitting request from low income mothers, is that they want their job to be easier to maintain their families. They want to have a safe place to put their kids when they're at work or a safe place to play with their kids when they're not. And they're lacking all three. And that was what they asked for. They didn't ask for more cash. They wanted the government to do more for families. And they're not alone. And it's a point that's lost on a lot of people that we spend so much time disparaging low income people and people in poverty. But their request would be, you know, pretty similar to mine. Family friendly work policies, childcare for my kids in a safe place for them to play and grow and interact.

[B]

Yeah, yeah.

[A]

Um, all right. After Retcon, we do Terms and Conditions.

[B]

We sound super high energy today.

[A]

We sound super high energy. I. I'm in agony. So I'm like, I'm trying, I'm trying to maintain composure as it is getting physically hard for me to talk. We're just gonna, we're just gonna get some words out. Okay.

[B]

So for those of you who are listening on the podcast, Katherine's in a little bit of discomfort due to the fact that she's got this very large baby growing inside of her. So apparently I'm going to take on our next chapter by myself, which is called Terms and Conditions. What did I look up this week? Catherine, I know you want to ask. I looked up the word spiv. This came up in a novel that I read and I had never seen it. And the context was something like she had grown up wealthy, but since her father had lost everything, she had become something of a spiv. And spiv is English slang, British slang, for a particular kind of petty criminal who sort of exists by their wits rather than holding down a job. So this came into use in the early 20th century, but became prominent in the World War II era in England, related to kind of well dressed, slick looking guys who would trade in the black market on goods that were rationed. So a spiv is somebody who could always get their hands on things that nobody else could get their hands on. And in the case of the novel, she's sort of the spiv. Ish. Characters, a little bit of a shoplifter and makes homemade cannabis products on the side.

[A]

So is it negative?

[B]

It's not good. Yeah, it's. It's like. It's. It's criminal for sure.

[A]

Okay.

[B]

Like lightweight, petty criminal.

[A]

Lightweight, petty criminal. Spiv.

[B]

Okay, okay. So following up on the discussion last week about the sort of state of the jobs market and how we got to where we are this week, we wanted to talk a little bit about unemployment, specifically unemployment insurance, which people do just call unemployment, but it is a specific program. As a little backstory, this is the topic that introduced me and Catherine five plus years ago. We met online on Zoom at the very beginning of the pandemic when we were talking about what were the issues to be looking out for in the months ahead. Katherine piped up out of the clatter of all these other issues and said, and the unemployment system is completely broken.

[A]

And it still is, I was going to say.

[B]

So my first question is, did anything change after the crisis of 24 million people being thrown out of work and the slow response of unemployment systems that are run through the states on cobol?

[A]

Yeah, a lot changed, and then it went back. So actually making the program robust requires state legislatures to either raise their taxes or raise their benefits or both to come up with a better kind of safety net for people who are unemployed. And the vast majority of them have not touched it. In fact, some have been cutting their benefit.

[B]

They've actually made it worse.

[A]

Yes. Now, the Biden administration spent a ton of money and effort on modernization and really trying to help state governments work basically outside of legislation to make improvements where possible. There's only so much that they can do.

[B]

So there's only so much that the states can do, or there's only so much that the people running unemployment insurance systems in their state can do without legislative support.

[A]

Yeah, exactly. You have people who administer and implement the program versus people who vote on it. And the changes that unemployment insurance needs is votes. What Biden pushed through was what they could get done outside of state legislatures. But you need a state legislature to vote on actually raising the benefit to an adequate level, which they didn't do.

[B]

And that. And to your mind, that's the biggest, the big change that needs to happen as opposed to expanding who gets it or.

[A]

Yeah. So unemployment insurance is a social insurance program. In some ways, it's similar to Social Security. It's funded by a payroll tax. In this case, it's just paid by the employer. Not employer, employee. It's paid into a trust fund. The Trust fund funds the benefits. And the benefits are apportioned out to workers based on their individual work history. So how much you get from unemployment insurance depends on how much you worked, how much you earned. And then state has some formula for determining the benefit amount and the benefit length. So it's a similar model to Social Security, but much worse, because instead of being run by a federal agency, it's run individually by each separate state government. So, you know, imagine that Social Security, Instead of having one Social Security, there were 50 Social Security programs. Each state had their own version. And if you put that on a timer for 70 years, do you think it would be good or bad? Bad. The answer is bad. It has the same model of Social Security, but just so much worse execution.

[B]

Can you give me an example of like, sort of the extremes in generosity and stinginess in these between states? Like, is it really different from one place to another?

[A]

So the broad intention of unemployment insurance is to replace about half of your weekly wage. You can only get it if you lost your job through no fault of your own. So no quits, no firing for cause, and no new entrance or re entrants. These are just people who have had employment paid into the system, and their employer verifies that they lost their job through no fault of their own because there were layoffs or the firm closed.

[B]

Can you stop and explain what new entrance and reentrants are?

[A]

New entrants would be like a college graduate or a high school graduate, People.

[B]

Who is newly entering the workforce in general.

[A]

Yeah, they've never worked before.

[B]

Okay.

[A]

And then a re entrant would be someone who has not worked in a.

[B]

While but is coming back, coming back into the workforce.

[A]

Someone who was in prison for five years and is now looking for a job. They. They. They don't get anything.

[B]

Got it. So what about somebody coming out of the military?

[A]

The military has its own unemployment system. When you are discharged from the military, you can apply for unemployment. It's based on the state that you move to, and the federal government pays back the state for your benefit. So unemployment insurance is what I wrote my dissertation on. Like, Catherine, Ph.D. labor economist. Like that, I, like, cut my teeth on unemployment insurance. Like, this is the program I studied the most. And so in the pandemic, when unemployment insurance becomes so important to pandemic relief and yet has all these endemic problems, I was just catapulted to a level of, like, media and policy influence that, like, I was completely not expecting. Because even in bad recessions, no one cares about this program. During the pandemic. I was briefing a group of state level policymakers that included a former governor. And I talked about how I had been having meetings with like state governments all over the US Trying to give them advice on their unemployment insurance program and the effect it could have on their local economy. And this governor said, I'm so glad you're doing that because as you know, we don't care about it at all. And I was like, wow, I am so glad you told me that because that confirms what I felt to be true, which is that no governor is like, I'm so proud that we're so good at helping unemployed people.

[B]

Yeah, I'm sure they don't even think about it.

[A]

Yeah, no. Unless they want to cut it. Right? So, yeah, I mean, Rick Scott, the former governor of Florida, like, made it like a mantle of his tenure as the governor of Florida that he was going to make the program as awful as possible. And there's clips from him, like, at some kind of like youth conservative conference. And he's bragging about how Florida was able to successfully cut their unemployment program. He's like, guess how many people are on Florida's unemployment insurance program now? And like, true to everything wrong with how people perceive unemployed people, some kid says like 5 million. And he like looks at you and he's like, what is wrong with you, kid?

[B]

How many people today just throw out a guess how many people when I left office were on unemployment benefits? 10 million is one. Anybody else? 61,000.

[A]

Yeah. I mean, this was like a point of pride that they, that Florida had successfully cut the program. Most states just ignore it. There are a few exceptions. Washington state has a good program. New Jersey has the best program, and Massachusetts probably has the most generous. But one way to see the difference across states is in the maximum benefit, where like I have this replacement rate of. Based on your past earnings. So say you made $52,000 a year and your average earnings was $1,000 a week and you lose your job and you apply for unemployment insurance. The formula is going to be some function of transforming 52,000 a year and 1,000 a week into a benefit amount.

[B]

Okay.

[A]

And that formula has a cap where like you can get a weekly benefit that is 152nd of your average annual earnings up to $200.

[B]

So why do the formula like.

[A]

Yeah, so the lowest cap states historically are Mississippi, Louisiana and Oklahoma, and the highest cap states are Massachusetts and Washington. It's a big difference too. It's the difference of, say, a maximum benefit in Massachusetts that's over $1000, you know, almost 1100 versus Louisiana, which is. It's around 230 bucks a week.

[B]

Good lord.

[A]

Oh, yeah, It's. It's shameful. So one of my, like, big break pieces of a column I wrote in the Pandemic was that I pointed out that if you were to take the maximum benefit across states and just apply that to a simple weighting system where you looked at where black people actually lived, the average white benefit and the average black benefit were a thousand bucks off.

[B]

Wow. Yeah.

[A]

Over the course of an unemployment insurance spell. Because the states that have the most black people have the least benefits, generous benefits, and the states that have, you know, few black people tend to have the most generous benefits. And so if you were to just reweight the population based on what their maximum amount of unemployment they could get, the total maximum amount over an unemployment smell was $1,000 less for black people. Now, to be fair, white people in those states are also not doing great. But it's where, like, a disproportionate share of black people live in states that have really low unemployment benefits. This is not novel. This is just something that I happen to point out. And you could do the same thing with the minimum wage.

[B]

Does that mean if you were employed in one state and moved to another, you would forfeit your benefits? So, like, say I live. I live in California. I got laid off from my job. I decided I'm going to move to Nevada because I think I can get a job there.

[A]

No, you apply for unemployment wherever the job site is.

[B]

Okay.

[A]

So like, let's say I live in New Jersey, but I work in New York.

[B]

Yeah.

[A]

And I go from Hoboken or Union City and I go into New York City, and that's where my job is. And I get laid off. I apply for unemployment in New York.

[B]

State because that's where the company is based. Because that's where better than if you move out of New Jersey and move to Pennsylvania.

[A]

No, it's wherever the unemployment insurance taxes were paid, which typically is where the physical work site is. That is, that is the state that determines the. The benefit.

[B]

Got it. I mean, what do you think people miss? Ordinary people. Not state legislators who don't care. What do you think? And governors. Well, I know. I'm just. I am curious about their motivation in cutting unemployment insurance. It just doesn't seem like the savings should be so great if it's 12,000 people who are on unemployment insurance in Florida or whatever the number is that being stingy pays off. That Much for the state. Is it just bragging rights?

[A]

Okay. I think there's, like, some people who are, like Republicans trying to make a name for themselves by, like, cutting benefits for unemployed people as a way to say that, like, we're kicking those lazy people off of the government dole and making sure that they get to work. I think for most of it's just neglect. Like, they don't care. They don't want business taxes high. Unemployment insurance was created in the Social Security Act of 1935. And for the first, I mean, basically 30 years of its existence, it coasted on the fact that it was taking in, like, war chest of money and paying out little in benefits because it went through things like the wartime production, maximum employment, where wages were spiking and nobody was losing their job. Right. So you get all these people paying into the program and then. And then we have massive expansions to the program as well as labor laws that see this blossoming of wage growth in the 1950s. And it's only until you get to the 1970s that, like, these war chests start to run dry.

[B]

There's a war chest in every state there's a war chest because it's set up this way. Okay. Yeah.

[A]

There's 53 separate trust funds for states. D.C. the Virgin Islands, Puerto Rico. In Puerto rico. So between 1973 and 1981, the US had three recessions, and in between, they had stagflation and a weak economy. And unemployment insurance really starts to show its structural weaknesses, like the trust funds were running out of money. But states didn't want to raise payroll taxes in their state during such a weak economic era, which is perfectly legitimate. Legitimate concern. Developing in tandem comes these economic arguments that the benefits are too generous. The program isn't suited to the modern economy. It needs to be redesigned around what the 1970s labor market looks like and not what the 1930s labor market looks like. And then in parallel, there's also just a blossoming of language around how lazy the unemployed are and how they're grifters and they're just trying to live off the government. Oh, my God. Actually, I have an amazing story about that. Hold on, hold on.

[B]

Story coming from the bottom shelf there. Eruption. The untold story about St. Helens. Have you been there? It's amazing.

[A]

No, I've never been.

[B]

I remember the explosion, and then we went on a trip through Oregon a few years ago and actually went to the national park. And I had no idea how powerful this eruption was and why people were kind of still in the way of it. It's great if you're ever out there.

[A]

So just a little bit of timeline orientation for all the optimists in case Mount St. Helens 1980 eruption isn't front of mind. The mountain starts shaking and showing pre volcanic activity in March. So you have about a two month period where state and local and federal agencies are trying to decide how much do we need to evacuate where, where do we need to clear off safe zones and so on. And in the middle of this falls a set of loggers who are working on the side of the mountain. For a logging company, the death toll of Mount St. Helens would have been 10 times what it was if it had not blown on a Sunday because there were loggers working on the mountain in the blast zone that were basically told they had to keep working. And so if it had been Monday morning, all of them would have been dead. But it was a Sunday and they weren't at work. So this guy, Les Ludwig from the Washington State Division of Industrial Safety and Health said after the eruption that in April, which is the month in between the warning and the eruption, they were getting complaints from the workers of the logging companies that they didn't feel safe going to work. And he says at the end I thought that most of the complaints were from people who wanted a way to get out of work. Frankly, I thought they were out to get unemployment compensation. I wouldn't want this to get out in the press, but that's what I thought. So there's like, there is no level to which laziness does not come first among things wrong with you when you're unemployed. And I was reading this, I read a lot of book about disasters in the pandemic. And I remember I read that and I sat up and I was like.

[B]

Jesus, you know, again, if you don't know the story of Mount St. Helens, it was so clear that it was going to erupt that they had geologists and photographers just camped out looking at it all the time. And the reason that we have some of the images we have is because people who actually died in that explosion were there filming and taking pictures all the time.

[A]

I could talk about Mount St. Helens for a long time, but I think it's indicative of the view in the 70s that unemployed people were bad. And it overlaps with the financial reality that states no longer have a war chest. And so they've got to, they've got to raise taxes on every business in.

[B]

Their state to refill the, to refill that war chest.

[A]

Yeah. Or they have to let Benefits slide, right? And so they let benefits slide. And at this point, the federal government starts a commission that says we need to reform unemployment insurance. And it's like a multi year commission. They meet, I think they started in 76, they come up with a final report and they're like, here's all the things we need to do about unemployment insurance. And businesses are at the table and labor unions at the table, and we've got all these people here talking about what unemployment insurance needs. The commission comes out, Democrats lose the election, Reagan is president. Everything that the commission says is put in a drawer and completely ignored. All right, so this problem gets worse. And then we get to the 90s and we have another like pretty brutal long recession in early 90s and unemployment insurance is failing. And it's not just failing workers, it's failing the national economy. This is a critical source of macroeconomic stabilization. In other words, people lose their jobs, they stop spending money, the economy shrinks. And this is an infusion of cash directed to the most adversely hurt in a recession that not only helps them prop up their lives, but prop up the spending that is our economy.

[B]

Right, right, right.

[A]

So in the 90s, they're like, you know what? We need the commission. We need a big old commission and we should get all these people at the table and do a big commission on how to fix unemployment. And Democrats lose the midterms. And so when it comes out, the 1998 Republican Congress is like, or hear me out, we just shut down government completely and it's completely ignored.

[B]

And were the findings of these two commissions similar? Yeah. And what did they do? They think it should stay being managed at the state level.

[A]

Yeah, both of them did, but they wanted it to be kind of like more triggers for automatic tax increases, more design on the federal level if you have to have certain minimums of your tax and benefit system that rise with the federal government. And then a lot of stuff that's like, hey, maybe it should be larger for old people because losing your job at 25 and losing your job at 55 are two very, very different things. It's serving both populations poorly because it's almost too generous to young workers who could get re employed historically really quickly and ungenerous for older workers who have a really hard time getting re employed after a layoff. If you're keeping count, this is the second national commission in three decades to reform a program. Nothing's happened. Then the Great Recession hits and it's just a.

[B]

It's a bloodbath.

[A]

Bloodbath an absolute catastrophe for all of these trust funds. They have to, when they run out of money, they have to borrow the money from the federal government. That means that they automatically have to raise taxes on every employer in their state, like in the depth of the Great Recession, in order to start paying back the federal government. And the Government Accountability Office releases a report that's like, you have to raise your taxes. You cannot starve your trust funds. And instead, at least half of states slash benefits and basically decide they're going to starve the program. And then, of course, businesses are complicit in this because they hire people. Talx was the name of the company. T A L X. It's now Equifax Workforce Solutions, who has declined to sponsor us for the show. But Equifax Workforce Solutions basically tells employers, I'll handle all of your unemployment insurance claims. So if a worker who is laid off and is eligible for unemployment insurance makes a claim to the state to say, I need to get this benefit, their former employer has to certify that they lost their job through no fault of their own. And the employer has a window of time to do this. It's typically 21 days. What someone like Equifax Workforce Solutions will do is they'll handle all those claims, sit on them for exactly 21 days, and wait until the last possible day to send it back. By which point, the unemployed worker has probably gotten so frustrated or so desperate that they've taken another job or they've given up on the claim being paid. So during the pandemic, I sent easily 50 reporters to the Equifax Workforce Solutions landing page in which they bragged openly about how much money they saved employers by paying out less in claims. And I said to a reporter, the only way to save money on unemployment insurance is to prevent people from getting it who are eligible. So that is what they are claiming to do in the landing page of Equifax Workforce Solutions. And then one reporter was like, I think they moved it. She called me, and I was like, I'll find it.

[B]

I just want to back up one second. If you're a company and you've laid people off, you've been paying this tax all along. That text has gone into a trust fund. What benefit to you is there of having Equifax Workforce Solutions prevent people from getting the benefit that you've already contributed toward? Does that make sense?

[A]

Yes. And this is where we come to what has to be the worst designed feature of a public program that I have ever encountered. And that is called experience rating. Oh, the unemployment insurance tax.

[B]

Having flashbacks?

[A]

Are you remembering the glory days? Yeah. The unemployment insurance tax that businesses have to pay, that's a per cap on you. I mean, it's not that high. It varies based on how many people they send into the program.

[B]

So one company's tax rate is completely different from a different company's tax rate.

[A]

Based on the number of successful claims. So say you have two companies, they both have a thousand employees. They've both been paying unemployment insurance taxes on those thousand employees wages. The economy goes a little south and they both decide to lay off 100 people. One company has 100 people laid off and all 100 successfully claim unemployment insurance. The other company has 100 people laid off, but only 10 successfully claim unemployment insurance. The company that had more workers enroll and claim unemployment insurance will face a higher tax on all of its current and future workers for a period that could last to five years. So now these two companies with 900 workers left, one that had more workers get unemployment insurance has higher taxes on all 900 workers as opposed to the one that just had 10.

[B]

That's crazy.

[A]

Yeah. It's not smart. It is a. Now the idea, it wasn't, it didn't come from a bad place.

[B]

It didn't come from nowhere but. Right.

[A]

It didn't come from a bad place. It was the philosophy of prevention that if employers had to pay for sending people to unemployment that they would lay off fewer people. And there is evidence that to this day we do have, have slightly less layoffs because businesses don't want to pay a higher unemployment tax. So it's kind of like workers compensation. If you have to pay a tax that based on, that's based on the number of people that get injured on your work site, you're going to make a safer work site. You're going to prevent injury from occurring because that's cheaper for you. They kind of applied the same idea to unemployment.

[B]

And yeah, I mean, I can sort of see that's trying to incentivize, not just laying people off at willy nilly at any older time.

[A]

Right. But what actually incentivizes is not letting people onto the program.

[B]

Right. It's, it's actually incentivizing something different. And also it's punishing employers. It kind of kicks them when they're down.

[A]

I mean, employers are basically incentivized to not have workers get the benefit. And at the same time, state legislatures aren't going to be like, great news, we're going to Raise taxes on every employer in our state. I mean, unemployed workers are ephemeral. These businesses are there always. This is a permanent constituency advocating for lower taxes, lower benefits and lower participation. And these just may flies of workers who come in and realize how terrible the program is. But then they leave again and there's no permanent.

[B]

They go get a job and then they're not, they're not concerned with it anymore.

[A]

No, there's no permanent constituency for better unemployment. So yeah, I mean, you just have all those problems, put them on a timer, set it for 75 years, forget it, and you'll end up with the awful system that we have today, which is completely unprepared for a recession. The federal government now basically has to stand up an unemployment insurance program in the middle of a recession to make sure people actually get benefits. And then they wind it back down again and it enters this like cycle of oh my God, the economy is crashing. We need to help unemployed people. Let's get them money, let's get them benefits, let's get a lot of people enrolled. And then like six months later they're like, these lazy people do not want to work. We need to claw back all these benefits. This is not good policy making. It's not not good. This is me as an economist telling you officially we would call this not good. We could do a lot better.

[B]

The federal government almost always steps in to top up benefits. That's what they did in the pandemic. Do they just essentially supersede the state program and say, I don't care what Florida says, I don't care what North Carolina says, you're going to get 26 weeks?

[A]

Yeah. There's a complex trigger system based on the unemployment rate in the state at the time versus whatever the federal government decides to do on top of that. So there are some automatic increases in benefits based on the unemployment rate in the state as well as some that the federal government adds on. The federal government has intervened in unemployment insurance in every recession since the 1950s.

[B]

That enough should tell you that the state level systems aren't adequate. Facing a recession anyway.

[A]

Yeah. In each successive recession, the scope and the scale of their intervention has gotten bigger and bigger. And the pandemic intervention was, I mean, it was wild. So I mean, keep in mind we're talking about a program that at most will serve a half of unemployed people, but typically serves closer to a third because you have to have lost your job through no fault of your own, have worked previously and have your employer certify it and you have to be willing and available to work. It's rare to be more than half of unemployed people who are on unemployment insurance.

[B]

It will still only get half of people who. Who should get it.

[A]

It's like half, twice over. Because of people who would be eligible for unemployment insurance, typically at most half will pick it up. But of people who are unemployed, meaning that they don't have a job and they're actively looking for work, no more than half are typically even eligible for unemployment. So on average, around a quarter of.

[B]

The unemployed are actually getting unemployment insurance.

[A]

Are actually getting benefits. So it's. It's much better to think of it as. It's layoff insurance as opposed to unemployment insurance. And it was designed for factory workers in, like, 1925. So a lot of ways it doesn't fit in those times. Like, a factory would shut down for the winter or there would be a slow season and they would put everybody on temporary layoff and say, you're not going to work for the next three months because we don't have any orders. And then they would go on unemployment insurance and they would come back and it's. We don't have that now.

[B]

We had some of that in Hollywood when a show production would shut down and they would go at unemployment insurance. But that was the only example I can think of. Now.

[A]

Sometimes you'll have seasonal workers, like you're hired for a department store and then you're laid off at the end. But you have to have worked enough in order to actually get the benefit. Two months of work is not going to cut it. So it serves nobody well. That's unemployment insurance today.

[B]

Mm.

[A]

So this is like a quick reiteration of the problems. It's underfunded. It's not that generous. It varies too much across states. It has a terrible financing scheme. And it's also so critically important to the economy in a recession that the federal government has to repeatedly step in to prop it up to the point where states have now learned what is arguably the correct lesson, that it doesn't matter if they ignore these programs because the federal government will fix it when it counts. So, like this, it's not going to get better. There are some states that will produce heroic efforts for unemployment in their state. So if you want to go lose a job, go lose a job in New Jersey or Washington, Massachusetts, Colorado. Outside of that, it gets dodgy quickly. California has somewhat generous benefits, but it is a grossly underfunded program and they have raised their benefit. This is like this. This is like such a Catastrophe of liberalism. They've raised their benefits so many times and they've never raised their tax.

[B]

Yeah, that sounds like California. Yeah.

[A]

And they're expanding benefits. Like there's lots of states that are trying to find like undocumented workers to help get them into the program and get them benefits. But California's got to get that tax up. So for about 50 years now, this has been a problem. So I'm not necessarily optimistic about unemployment insurance turning around. What I am optimistic about is a new program just starting.

[B]

I would just start from scratch on this.

[A]

Yeah. I mean, I would start from scratch. On the worker side, I think you could, I think you could repurpose on the employer side, you, you have a tax on businesses that they pay into a trust fund fund. Right now it goes to workers, by the way, red flag. They're paying a tax that someone else gets. But if you had a tax that instead of going to workers, went instead back to businesses where the trust fund and the insurance program is all, what do they say? B2B. To me, it makes policy design sense that the people who benefit from the program are the people who pay for it in a social insurance scheme. We're just going to also red flag that. This is something liberals hate me for saying, but you could imagine a repurposed unemployment insurance trust fund that basically runs like the PPP did during the pandemic, where it's a grant to businesses who are going through things like there's a recession or there's a disruption to business that comes from construction, there's a disruption to business that comes from a natural disaster and they have their own insurance trust fund that they apportion out. I didn't love the PPP program during the pandemic probably because it just had such an incredible amount of fraud. But I do think that there's a need to have a support for businesses when the economy is in trouble. And at the moment they really don't have much.

[B]

And just to remember, remind people the VPP plan meant you got money if you kept your people employed.

[A]

Yes. And it was rife with fraud. The number of people in Congress who got it is wild. There's no reason why, just because it was so fraud ridden in the pandemic.

[B]

It would have to be fraud ridden in the future.

[A]

Yeah. And that's. And that, I mean, I think there are some state governments that would be like, we could do this really well. Like, we could manage this money incredibly well. I'm sure some states would be like, our businesses don't need it, but whatever. But I could see some, like, state workforce industrial boards being like, we could manage an insurance program that helps businesses keep people on payroll very well and then leave that to the states because businesses move less than people do. So that's the business side on the worker side. My dream for unemployment, I heard one person describe it as crazy. I wrote out all these plans for, like, what I would do for an unemployment program, and it's like, I've never seen conservatives and liberals so united in disliking something. I know that this show has a progressive liberal bent, but y'.

[B]

All.

[A]

I can get liberal people mad at me so fast. Like, you don't. Y' all don't even know.

[B]

Oh, I didn't. I know.

[A]

So here. Here's my, like, dream. Dream system that unites liberals and conservatives.

[B]

In their hatred of Catherine and their.

[A]

Hatred of this system.

[B]

In the Edwards Republic, this is what.

[A]

We look at Edwards Republic, the long. This is actually one long executive order.

[B]

That you've been noodling on since graduate school.

[A]

Oh, yeah.

[B]

Okay.

[A]

Yeah. So, all right. So I think we should support unemployed people. You cannot say that without saying, undoubtedly, if you give someone who doesn't have a job cash, they will stay unemployed longer. I am fine with that. I think there are good and bad consequences to having people who don't have a job have financial cushion that doesn't rely on their past savings or more likely, their parents or their partner. There is an overwhelming amount of evidence that only goes in one direction, that the more generous unemployment benefits are, the longer someone will stay unemployed.

[B]

I'm sorry, what do you mean they only go in?

[A]

I mean, like, there's not a lot of studies that's like, if I gave someone a hundred bucks versus 1,000 bucks on unemployment, or if I gave them four weeks of unemployment or 15 weeks of unemployment, that they would all find a job at the same rate. However, there are very few studies that find more generous unemployment prevents reemployment.

[B]

And so the question is, what are you investing in and what are we getting out of that cushion?

[A]

I think you just gotta be comfortable saying, I'm willing to give more money, which could lead to higher unemployment rates for people who don't have a job to support the job search, to support and invest in better re. Employment for people who are unemployed.

[B]

Can we.

[A]

This is why. This is why. I gotta say that again. Okay. This is why. All right. There are a lot of words there.

[B]

And they were the same.

[A]

Okay, throw back to earlier in the episode, podcasting just Getting some words out. Brought to you by Equifax Workforce Solutions.

[B]

Oh, man.

[A]

There's going to be a meeting on the eastern seaboard in the fog with someone from like, Big Cinnamon and Equifax Workforce Solutions and Starbucks being like, we've got to shut this place down.

[B]

Yeah. There are 3,000 listeners. Storm the gates.

[A]

Okay, okay. So my starting point would say that the conservative pushback against unemployment benefits in any form, whether what I propose or what currently exists, is that if you give someone out of work money, it will take them longer to find a job. That is true. The question is, do you care? Catherine doesn't care. Because they don't. There's not evidence that if you give someone unemployed money, they'll never find a job. It's really about how long it takes them to find one. The conservative take would be you're extending unemployment, which is true, but my bent would be you're investing in re Employment, I. E. Them finding a better job. Because if I lose my job and I have nothing, I have to take the first worst job I can find. If I lose my job and I've got like $3,000 of cushion, I can wait as long as possible to try and find the best job possible.

[B]

Right. And that could mean one with better hours. It could be one closer to you, it could be one that. A closer match to your skills. I mean, those are all the things that people are balancing when they're trying to figure out, where can I get something quickly, but that's really worth it.

[A]

Yeah. And I think that this is better for the economy. I mean, like, I like helping people and I'm sympathetic to workers, but at the end of the day, I'm a heartless economist. And your skills in education and experience are collectively are referred to as your human capital. And the skills and education and experience of all workers in the US Is our American economy wide human capital. If you work at some job and get fired or laid off or quit, and you restart as, say, someone mopping the floors at Starbucks, your human capital, everything that you learned from the prior job, I mean, is basically wasted because you're now in a job where you don't use it at all, which means it doesn't benefit the economy at all. All the skills and experience you had, it's gone. And we've invested in you. And the economy benefits from that human capital, but we're essentially in the process of destroying it because every time you lose your job, you have to start over. That's not efficient. It's not Productive, it's not good for our economy. I don't care about workers or people or what they do, but I care about economic potential and I know that that comes from human capital in a service oriented economy like the one that we have. So no.

[B]

Do you want to fight about workers? Deny it?

[A]

I mean, I do, I mean, but okay, don't tell anybody, but yeah, yeah, of course I care about workers. But like that is the cold hearted economic argument of like, yeah, your sob story about you losing your job aside, like there is a cold hearted calculus here. I've invested in you and I don't want to see that investment thrown away.

[B]

It's funny, I feel like that requires people seeing both at the like individual level but also a much bigger picture. And everybody who just wants to look at, you know, it's like not the forest or the trees. Right. Just this little grove which is the business aspect of the whole thing. How much incentive and pressure can we put on people to come back to get to take the jobs that we want them to take because we're trying to fill them probably for less money than the market would bear.

[A]

Yeah. So I mean if we had a system of no unemployment, no one who became unemployed ever got any type of public help help have the cushion of a long unemployment are those people who had earned enough to have savings, have rich parents or family members and that's it. And that's not a predictor of the most valuable people in our economy or our human capital investment. Instead, you'd have a lot of people who would quit their job and like immediately get some low wage one or drive for Uber and you're wasting human capital.

[B]

I mean, and I think you see this in for instance, the college graduates. Right? Yeah, they're the, to me, an example of exactly what you're talking about. They've invested somehow in an education, they've come out, they're not eligible for unemployment and they wind up being forced to take the first job that they can get, which is not necessarily the best place for them to actually start a career.

[A]

No, it's not. And even though they'll get past it and I think they'll recover from it because they are really young, that's the same problem that is more severe if instead of being a 22 year old college graduate, they were a 32 year old who had been working for 10 years because you're losing more human capital at every step and the labor market.

[B]

Might punch or who gone back to school and got a master's degree.

[A]

Exactly. So I think it's worth saying that the conservative argument here is right. I just don't think it's the most important argument. I basically think that anybody who wants unemployment should be able to go out and get it, and that if the program is designed correctly, you can manage the incentives of how you get it. So I kind of envisioned having like a tiered unemployment system, believe it or not, which I guess over where we've been for the last five years. The answer would probably be not. The median unemployment spell in the US is pretty short. It's about 10 weeks. And since it's a median, that means that for half of people who are unemployed, they will get a job in less than 10 weeks. Now for the other half it's a lot longer. And in fact the average unemployment spell is almost double that. And when you have that much dispersion between a median and an average, it means you have big tail effects where you have a lot of people who get a job really quickly and a lot of people who don't get a job that quickly at all. The unemployment insurance system that we currently have absolutely ignores all of this. It's just one length of benefit for everyone who successfully enrolls in the program. That's not what we know about the unemployed. And in the base case for a lot of states it's 26 weeks. Well, that doesn't make sense. 26 is an arbitrary number. We know that in good times you don't need to be unemployed for six months. We know that if you're young, you're reemployed really quickly, you don't need to be unemployed for six months. But like in a recession, if you're an older worker, if it's a layoff where like your factory closed and there's no other factor in your town that's very different from, you know, they cut your shift at a retail store and there's four more open next to you. So we know so much about unemployment and who has a harder time and who needs help and none of it is incorporated into the current system. So I think we could just come up with a flexible design. That's basically what I think of as a progressive tiered system where anybody can get unemployment who wants it. But the first tier is like really short. It's basically like a two to three week benefit that pays out at a decent rate. But if you need more, you have to go back and get a tier 2 benefits which comes with things like you have to get employment counseling and set yourself up with a counselor. You, you have to have basically like a prognosis made of like re employment opportunities and things like that. And if that runs out, you end up in tier 3 unemployment, which would kick you over into things like, like tuition assistance for training or you know, wraparound services so that if you go into full time training you can get, you know, like food stamps for your family and things like that. And the benefit is basically more to support not leaving the labor force, but basically keeping you in. So like each tier is like a longer time, less money and more involvement with a caseworker to help you get reassigned into what you need, whether that's, you know, school or training or what have you.

[B]

Yeah, that's interesting. I didn't see it going that direction. I thought I saw it going like the longer you're on it, you're going to get less. But in fact the point of not letting workers become discouraged workers detached from the workforce, people aren't looking for jobs anymore. If that's the goal of the system, you'd make a very different program.

[A]

It would be a very different program. And one thing that has been shown pretty definitively and that a lot of state programs are trying to incorporate to some level is that a lot of people who are looking for jobs benefit from counseling. Counseling like job seeker counseling, especially if you've worked one job for a long time or if you're new to the labor market, like you don't have a full sense of the economic opportunities within your reach or types of jobs there are, or employers that are looking. And so having counseling sessions of like, you can get your check, but you need to come in and we're going to talk about like what job postings are up right now. This human intervention of helping people who are looking for work, I mean they can have a really high payoff if it's done well. So you just build that into the program. You want to go from tier one to tier two, go, fine. You have to have an hour long meeting with someone who's going to like size up your labor market potential. And so it's a way to introduce services and assistance while basically kind of keeping people like afloat but not adrift.

[B]

Right.

[A]

And then you would have some type of like lifetime penalty that like if you have a tier one benefit where you, no questions asked, got some money from unemployment, you know, if you try to get it again, it's a lot less and it penalizes you. You know, something that like the incentives to use the system appropriately are built into how the money plays out over successive spells.

[B]

So I can understand why conservatives hate your big unemployment ideas. Why do liberals hate it?

[A]

Because the default benefit would be a lot shorter right now when you become laid off. And if you successfully enroll in unemployment insurance, you can get six months of benefits in a lot of states. You know, my new system would say you should get two or three, you know, maybe four. But remember that the median duration of unemployment is, is really low. Normally you don't need to have three times the duration of an unemployment spell and weekly benefit amounts. So I, I just think that this default into a high number is wrong and we should default people into a really low number and then just kind of expand the program kind of in response to the person as opposed to kind of erring on the side of everybody gets a lot of unemployment. We know so much about the labor market and unemployment winners and losers because we have 160 million people working, transitioning through a million and a half layoffs a month. You know, millions of quits, millions of hires, millions of transfers. Like we see so much data and evidence coming in of, of what the trajectories are and what varies it. I, I also think that this would help support a training system, a better.

[B]

Job training system, a better re.

[A]

Like job training re employment system. I think you could basically pitch it as like a, an automation technology AI. Yeah, that's kind of sav of like. Look, if you're worried about AI taking jobs, the only reason why that's scary is because unemployment sucks. So like let's build an amazing unemployment program that does things like retraining in the face of rapidly shifting technology and let's make that a right for all workers.

[B]

Yeah, I saw that the anthropic CEO just today I think was out saying again, well, we don't know that AI is going to take all of these jobs, but the probability is high enough that we feel like we need to warn everybody, you know, I mean, they.

[A]

Don'T know, but they don't know. Okay, sure. Like take them on face value. It's gonna like if someone told you there's a technology that is going to eradicate 5 million jobs in the next 10 years, what are you gonna do? I would go right to the unemployment and training system and make sure it's prepared to take 5 million people whose long term labor prospects have been severely altered because of a technology that won't be reversed. And I would come up with a multi tiered unemployment system for catching them and helping them find the appropriate services. Given their age and experience in Education and labor market trajectory. The people who are incredibly knowledgeable about unemployment insurance are mostly hostile to it because it essentially abandons the program.

[B]

They're mostly hostile to your idea.

[A]

They're mostly hostile to this idea on both sides. I get. I had a version of this idea published in the New York Times as an op ed and like, one of the responses I got on Twitter was like, I normally respect everything Katherine Edwards says, but not here. I was like, okay, damn tough, that one stings. But for what it's worth, I also think that we could do more for unemployed people that doesn't involve money. I put this in a column for Bloomberg a couple years ago where I think that we should have a new set of labor regulations related to job seekers.

[B]

Oh, just make like the job hunting. I mean, job hunting is so. It's so bad and getting, it seems like getting worse.

[A]

It's awful. Job hunting is awful. I mean, you could put a piece of legislation that says if you are posting a job, you have to say what your timeline is for hiring, how long, like how, like when the position will be filled by. You have to give a timeline of filling and you have to notify people if they don't get the job.

[B]

Yeah, God, no kidding. Like, it's like being ghosted by a.

[A]

Hundred companies, you know, just forbid ghosting. Like, they know they're not going to hire you. They have all the information, believe it or not, they have your contact information and the knowledge that they're not going to hire you. But, you know, just make them say it.

[B]

No kidding.

[A]

Just make them say, like within receiving an application, you have like 30 days, you know, or you have like a timeline posted for the position. And now there's lots of ways employers will try to get around that of like, this is a hire that will make over the next five years, you know, but then people won't apply for it. So I think you could use the market power of job seekers in a direction to put some requirements on people who post jobs. And then I am like 100,000% in favor of paying people for interview time. The amount of work that people have to go through of like, you have six interviews, you have an on site, we need a presentation. You need to prepare things for us. And after this presentation, like now you have to do this, like, you need to take this test, you need to do this coding assignment. That's fine. You want to make people jump through that many hoops, you have to compensate them for their time at the pay that the position requires. So if you want two days of work out of someone, you need to pay them for two days of work. Work. Now a bunch of people would say that's a horrible idea because now people would be less incentivized to have job.

[B]

Openings or less incentivized to, to look at a wide variety of candidates, especially in the era of anti DEI sentiment.

[A]

Yeah, but at the same time, here's what like we shouldn't tell any employer is that having them put out notifications of who doesn't get a job and paying people for their time for the compensation would actually be a lot of really great data for the EEOC to enforce anti discrimination and hiring law. Because you're making them give up information that could be used as the basis of a lawsuit of like, we don't see that you discriminated in hiring and you're supposed to hire people of different races and genders at the same rate. But actually it turns out that all the people that got rejected were black and you interviewed all the white people like it. I think it would generate a ton of data that could be used in our pocket as opposed to relying on their behavior. And yeah, I think job seekers are treated with such indignity that you could put some laws on their regulation.

[B]

Yeah, I think that making that experience more humane for people would go a long way.

[A]

It would go a long way. Then they can go to someone like an unemployment counselor to say like, Here are the 50 jobs that I got rejected from. I completed the application fully and I'm not getting the job. That then also becomes data for people like me studying labor market strengths to use to say we've got people on unemployment because they're holding a stack of rejections 100 high. Like the labor market is freezing up and we're not relying on like just one hiring rate produced with a two month lag from the Bureau of Labor Statistics. We've got real time data that job seekers are unduly suffering right now. I think it places so many advantages. There are potential costs, they're there and it would make things harder for employers in the hiring process. And yet my heart rate's what it was 30 seconds ago and I'm fine. And I think that to be fair.

[B]

I, I don't feel like recruiters feel like the, that the hiring process is working for them right now either. It's deeply broken and partly broken by AI.

[A]

Oh yeah, make them put up there. Like when you reject someone, you have to say if they were screened by a human or AI. That's a Law.

[B]

Yeah, that would be a good one. That would be a good one.

[A]

I'm sure they'll lie. I'm sure they'll say like, yeah, a human sent the send on the email that the AI told him to send. But you know, design and incentive is tough, but it's a lot tougher if you don't have anything. I'm going to come up with a version of job seeker protection that involves like notification, information, compensation for time. But you know, I'm sure employers will get around it in six months. That's fine. I can try again like I am, but I can't try at all. If we don't even have the notion in our economy that job seekers deserve more than what they currently get, and if we can build into our economy that job seekers deserve more, then we can do more. And I think I'm optimistic that the only way the specter of AI works in workers favor is if they take them as seriously as these anthropic environments and you know, whatever, CEO, open AI and anthropic, and all these people are like, here's how it's going to change the world. Fine. I'm not going to believe this is a PR campaign to go after sunk cost and investment that has no clear return or market. I'm going to take you on face value and we're going to redesign labor laws and we're going to redesign unemployment.

[B]

Right, Right. I like it. If we could get only that out of the AI hype machine, if we could get better, a better job application environment for people, it would be worth listening to. Unbearable. Sam Alton.

[A]

And you know what? Optimists really don't lose faith here. I have briefed committees behind closed door of Congress about exactly this. And I have said that the only way to truly protect workers from whatever is coming from AI is to take the job loss that they predict on face value and build a formidable unemployment program that puts power back with workers. And I have talked directly to members of Congress about this. So this is not something that's like pie in the sky of like, oh, wouldn't it be great? This is something that members of Congress know is coming. And to the extent that I actually had contact with them, if that gives you hope, it gave me hope.

[B]

Gives me hope. Okay, if I listen to you, they're all, yeah, even if they're not listening.

[A]

To me also, y' all could not get worse than the system we have.

[B]

Well, that for sure. Right?

[A]

Sometimes the greatest success is built off the lowest bar. And I'll Take it. Optimist. Economy. We say words that are recorded for a podcast. You're welcome. Let's get to our fake executive orders.

[B]

Executive order. Would you like to go first?

[A]

Oh, no, you can go first. Yours is, like, really? Yours is so on point.

[B]

Mine's on. Mine's on point. I'm actually borrowing an executive order this week from Roman Lutz of Seattle, who sent actually a long list of executive orders in. But this one seemed particularly relevant this week. If a company does a layoff, the C suite cannot get raises or bonuses for three years. And if, like me, you didn't know what the C suite was until I went to work for a company. Company. Those are all the people. Like, not just the CEO, but the cfo, coo. That is the executive level of a company.

[A]

I say this with a lot of love so those bastards would create a D suite that does get paid. Slippery. Slippery as a wet fish. But that just means we have to stay vigilant.

[B]

Excellent. So what's your executive order?

[A]

Mine is that you cannot be appointed to a federal agency that you would not be qualified to work at. So if you are nominated for a Senate confirmed position, you have to simultaneously submit an anonymous resume to an opening at that agency. And if you don't get hired at the bottom, you can't.

[B]

You can't lead top. Yeah.

[A]

And I think this would actually be an incredibly helpful screening mechanism.

[B]

Hard agree.

[A]

Hard agree. Incredibly effective screening mechanism that, you know, I'm. I'm kind of like. And who wants to be like, who's gonna champion. Not this. I have an idea.

[B]

I do too. A couple agencies. Yeah.

[A]

But that was inspired by someone pointing out that the guy nominated to run the Bureau of Labor Statistics would, like. Like he would never get a job there. Like it would. It was. Now. It was brought up by someone in a really mean way, but it was fair. Like he was unqualified for an entry level economist position at that agency. I tried to work at the BLS and applied there, and I didn't make it through because I. I didn't have enough survey experience in my dissertation.

[B]

Because you were busy looking at unemployment shirts.

[A]

I'm like, my focus. You don't really.

[B]

You've made a strange choice, Ms. Edwards.

[A]

They didn't have an opening at the employment desk. They only had an opening up at the price desk. And the price desk people were like, how much do you know about prices? And I was like, I pay them. And they were like, we might go with someone who knows something about prices. And I was like, you know what? That's actually such a good choice. Y' all are so good at this. I should not be working at the price desk. I should be working at the employment desk. So.

[B]

All right, it's time for spiritual sponsors. Your spiritual sponsor this week.

[A]

Oh, I was driving in the car and the radio delivered an absolute gem of playing Radioheads, no surprises, and man, is that a good song. So I have a two way spiritual sponsor of when the radio delivers something that you love.

[B]

Exactly.

[A]

Which is such a good feeling.

[B]

It's like winning the jackpot.

[A]

Oh, God. It does feel like winning the lottery. Some random person figured out that you needed to hear no Surprises and that you hadn't in forever. So both the song no Surprises, which I do think is one of the millennial lullabies, and. And hearing a song that you love on the radio that you haven't heard in forever and that they deliver to you at the perfect moment.

[B]

Yeah, that's good. That's good. My spiritual sponsor this week is public libraries everywhere. Tip of the hat to our listener, Julie Martinez, who suggested this and who said she particularly loves the Ann Arbor, Michigan public library system. I love the Los Angeles Central Library, specifically in downtown Los Angeles, and of course, the branch system as well. But the central library is a beautiful building. Librarians are among my favorite people in the world. But also the Spokane Central Library, which was like a home away from home when we moved to Spokane.

[A]

Oh, my God. The MLK Library in Washington, D.C. it's just named after him. It's not like a. Like a presidential library, but. Oh, my God, the. The MLK library in downtown DC. First off, if you have kids under 10 and you visit our nation's capital, you have to go to this library because it has a slide down the stairs from the children's section. It's almost like a bowling alley of the really slick wood. Kids just fly. I mean, they fly down it. It's almost two stories and it's right off of the mall. It's so close to the portrait galley. And most people don't know. Like, you just have to go inside this massive library, take a right turn, and you'll hear children screaming with delight as they fly down from the children's section. Oh, man. That would be a good spiritual sponsor. Is the slide down the MLK Library. I had to do it once with maybe a little person who was a little nervous to do it by themselves. And I was like, Jesus. I was like, man, you're like about to clock some GS going down this thing, maybe it was like too much weight going down, just the right slickness, but like woo flew if people haven't read it.

[B]

There's a book about the LA Central Library called the Library Book by Susan Orlean that is terrific and it tells the whole history of the library and the librarians, but all through the lens of there was a fire at the Central Library that kept the library closed for ages and destroyed tons and tons of books and was sort of solved as an arson, but a little unresolved. Anyway, it's a terrific read, especially if you like libraries. Oh, I agree. I do.

[A]

Seattle downtown has an amazing public library. Austin's downtown library is an incredible library. And it's built over a bike path. So they built like a bike repair shop, like a DIY bike repair shop and like classes on how to repair your bike on the bike path that passes underneath the downtown library.

[B]

The LA Public Library has ukuleles you can check out. And I actually learned to play the ukulele at classes at the Central Library. Like there's just. Yeah, great. The great things that the librarians do do.

[A]

Also, this would be a plug to say that the American Library association has such a sleeper hit of a merch store.

[B]

Oh yeah, this is where you got your Reading Rainbow shirt.

[A]

Not just that, but also they have like so many great slogans about reading and not banning books. But one that I personally love is they had freed between the lines. I like that one. I have that one on a shirt and like a couple stickers and also a poster. And I cannot recommend the ALA store enough. And a lot of it is around banned books. And that's where you can get all of the read posters. So every Read poster you've ever had in the library, they sell a lot of them. And actually the way that I discovered this store, this is worth it. Don't cut it. Sophie. Is that when David Bowie died, they did a special reprint where you could reorder his Reid poster. And so they reissued it at his death, which I think they had printed it in like the 80s. And they reissued it so you could buy the Reed poster from David Bowie. So I have it framed. I'm like looking at it right now. I have it framed right here. But I also bought it for my sister in law who was a massive David Bowie fan. And I didn't tell her it was coming. I just sent it to her in the mail. So she was devastated when Bowie died. My husband was like, we should just send it and not tell her it's from us and just let it arrive in the mail one day. And I was like. Like, that's so perfect. And then, since then, they've taken so much of my money, which is good because they're libraries and they deserve it. And I get to look at David Bowie. He's reading the idiot.

[B]

Nice. Anyway, public libraries, we love them.

[A]

That's our show.

[B]

That's our show. If you need to get in touch with us, you can always do that by email@optimist economymail.com we're on Instagram, we're on TikTok, and we're on LinkedIn, so you can follow us on any of those places for updates. Also, you can get our newsletter on substack.

[A]

And we're also on YouTube.

[B]

Oh, yeah.

[A]

And listeners, this is normally the point where we would snap out Andy and Sophie, but we can't. We had to fire them both for Charlie Kirk comments. Yeah, sorry, everyone. They. They hated freedom. So we don't have producers on this show, which is why it got so bad. Just kidding. Oh, the Onion article. You're gonna be fired for reading this. Yes, Sophie, I read it. It's so kind. At the end of the show, we have to snap out. Andy and Sophie, thank you so much for your production assistance for. And you're a good studio chat in your amazing studio chat to just, I would say, both support us and sabotage us as we try to keep it professional. I wouldn't have it any other way. Honestly.

[B]

Not really.

[A]

No.

[B]

Okay.

[A]

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