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Obama Touts 2014 Jobs, but Analysis Suggests Growth Came in Spite of His Policies

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In this Feb. 20, 2015, file photo, President Barack Obama speaks in Washington. Relying on Republicans and going against the grain of his own party for his legislative successes has not been much of a go-to play in Obama's game plan. Then there's international trade. On Thursday, Feb. 26, Obama stepped up his campaign for expanding exports and negotiating new trade deals in Asia and Europe, a rare spot of common ground with Republicans and a raw point of friction with Democrats. (AP Photo/Evan Vucci, File)

President Barack Obama on Thursday heralded 2014's record unemployment drop, but an economic analysis shows those jobs resulted largely from a cut in unemployment benefits — something Obama strongly opposed.

“The unemployment rate dropped in every single state during 2014—the first time that's happened in 30 years,” Obama tweeted Thursday.

The president’s celebration comes more than a year after he issued dire warnings that not extending unemployment benefits would mean slashing almost a quarter of a million jobs from the economy. By contrast, the National Bureau of Economic Research said in a report that not extending the benefits actually added 1.8 million jobs, accounting for 61 percent of all the jobs created that year.

Advocates for extending unemployment benefits believe that the longer jobseekers search, the more likely they are to find a job. That misses the bigger picture, said NBER report co-author Iourii Manovskii, an economics professor at the 
University of Pennsylvania.

“More important was not how hard people looked for work, but how unemployment benefits affect firms,” Manovskii told TheBlaze. “To the extent that it benefitted workers, it was more expensive to the firms.”

“The size of the economic pie is different for working in the marketplace and staying at home,” he added. “The benefits make staying at home a less costly choice. But the pie shrinks. The firms have fewer professionals to hire. Productivity is not as high.”

Marcus Hagedorn of the University of Oslo and Kurt Mitman of Stockholm University were the other co-authors.

The Bureau of Labor Statistics announced this week that for the first time since 1984, annual average unemployment rates decreased from 2013 to 2014 in all 50 states and the District of Columbia:

This was the first year since 1984 in which all states and the District had over-the-year rate declines. The largest rate decline occurred in Illinois(-2.0 percentage points), followed by Colorado, North Carolina, and Ohio (-1.8 points each). Twenty additional states had over-the-year jobless rate decreases of at least 1.0 percentage point.

In his Dec. 7, 2013 weekly address about the ramifications of Congress not extending unemployment insurance, Obama warned of hurting families and harming the economy.

“Unemployment insurance is one of the most effective ways there is to boost our economy,” Obama said in 2013. “When people have money to spend on basic necessities, that means more customers for our businesses and, ultimately, more jobs. And the evidence shows that unemployment insurance doesn’t stop people from trying hard to find work.”

He added, “A report by the Department of Labor and my Council of Economic Advisors estimated that it could cost businesses 240,000 jobs and without the ability to feed their families or pay the bills, many people currently looking for work could stop looking for good.”

Obama and Democrats in Congress wanted to extend the unemployment insurance beyond 26 weeks for people who lost their job. During the recession, Congress routinely extended the benefits for much longer, to 53 weeks. In late 2013, the Democratic-controlled Senate passed an extension, but the Republican-controlled House did not, making 2014 the first year since the recession without extended benefits.

A significant level of 2014 job growth resulted from the 1 percent drop in the unemployment benefit durations, the National Bureau of Economic Research said in its report, issued in late January, before the recent BLS numbers.

“In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized,” the report said.

The report continued: “In the aggregate, our estimates imply that the cut in benefit duration accounted for about 61 percent of the aggregate employment growth in 2014.”

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