unemployment creates jobs, and at least we are not 15%

[Defender]

Apparently the economists Nancy Pelosi listens to can't do math.

Let's look at this from a mathematical economic perspective:

An example business, Joe's widgets exists in an economic bubble as a control. Joe wishes to hire more people. However,Joe's income is static and he breaks even exactly every month, and his only source of new revenue is customers who receive unemployment benefits. This is assuming he has maximized all possible revenue from the employed who buy widgets. In this example, widgets are considered a necessity. We assume the following: an unemployed customer makes $300 a week and will not spend more than 50% of his income on widgets. Additionally, Joe's profit margin is 50% per widget.

So, assuming Joe wished to hire someone at minimum wage for 40 hours a week ($300/week), he would need 6 weekly unemployment customers. 4 customers would spend 50% of their income, so $150 each. Of that $150, $75 of it goes to the cost of the widget. So 4 x $75 is $300, which covers the employee's wages, but that is not the end of Joe's expenses. Joe must pay half of the Social Security/Medicare tax, 7.65% or $22.95 is his share, not to mention liability insurance and other expenses with hiring an employee. So in a best case scenario, 5 customers cover the cost, however, since Joe must hire from this pool, he first needs an unemployed person to hire. So the sixth is required for the actual employment, otherwise Joe is losing money by only having 4 customers.

So, in this unrealistically positive scenario, it still takes 6 people on unemployment to create 1 job.

Additionally, we must assume the unemployment checks must come from somewhere. So where does this money come from? Taxes.(This is of course assuming these benefits have exhausted what Joe has paid in unemployment insurance.) Assuming Joes pays all of his employees, including himself, minimum wage, 7.5% of their taxes go to fund this. Remember they pay a total of about 15.15% in taxes, but 7.65% goes to social security and Medicare, in addition to the 7.65% Joe pays. So each employee pays about $22.50/week in taxes. So if the government spends 50% of its revenues on unemployment, it would require Joe to have 134 regular employees to cover 5 people on unemployment. This means Joe needs 675 regular weekly employed customers who spend $150 just to meet payroll and associated taxes.

So, in this unrealistic best case scenario it takes 675 employed citizens to employ 134 people to pay for 5 unemployed to create 1 unsustainable job.

So, the short of the story is, unemployment does not stimulate the economy and Nancy Pelosi is a self-serving idiot.

Ummm, I coulda told ya she was an idiot b\without the scenarios, lol. Just kidding...

[Rightwinger]

Reality is starting to assert itself again and it's harder and harder to twist the tail.

If you have not read Atlas Shrugged, do so. You will be amazed at how well she explained the same things that are occurring now back in 1957.

[Guest 6.8 AR]

Yeh, I think Nancy Pelosi would end up being "Kip's Ma" from the book.