In The Spotlight Blog

Remember one year ago, when President Obama was claiming that unless Republicans again renewed the temporary, extra-long unemployment benefits enacted in the depths of the recession, the economy would suffer?

Remember how his advisers claimed that if Congress let unemployment benefits return to normal, 240,000 jobs would be lost, and how a New York Times columnist claimed it was because Republicans liked to “afflict the afflicted”?

Republicans did not heed the president. The unprecedented 99 weeks of extended benefits expired. Unemployment benefits returned to normal.

And last week, President Obama was declaring 2014 “a breakthrough year for America.” Remember that?

A groundbreaking new study explains why it was such a good year, Investors Business Daily reports: It was because Republicans ignored Obama’s advice, as 60% of the jobs gained last year were due to the cutoff of extended unemployment benefits.

I’ve said as much, but now others are saying so, too. IBD writes:

“Economists from the University of Oslo, the Institute for International Economic Studies and the University of Pennsylvania took advantage of the sudden end to this federal benefit across the country to see how it correlated with job growth.

“Their findings, published this week by the highly respected National Bureau of Economic Research, found that because Congress didn't listen to Obama, ‘1.8 million additional jobs were created in 2014 due to the benefit cut.’”

You can read the study itself here. It’s worth doing. Economists Marcus Hagedorn, Iourii Manovskii and Kurt Mitman point out just how well the economy did:

“Average employment growth was about 25% higher in 2014 than in the best of several preceding years. The employment-to-population ratio rose. The unemployment rate declined sharply. In contrast to typical predictions, the labor force participation rate suddenly halted its steady secular decline.”

The majority of the effect, the economists write, was because Congress cut off the extra-long benefits. Naysayers claimed this would cause discouraged unemployed people to stop looking entirely – to drop out of the labor force. That didn’t happen, the researchers write, because cutting benefits encourages job creation:

“Not only did the unemployed not drop out of the labor force because of losing entitlement to benefits, but instead those previously not participating in the labor market decided to enter the labor force. . . . The increased availability of jobs than draws non-participants into the labor market.”

Others have already been saying this. North Carolina cut back on extended benefits earlier. Liberals implied this was immoral, but it led to more people finding work. Other observers have been noting the helpful effects of the national cut-off already.

None of this is to imply that unemployed people were lazy. I’m not saying that, nor were conservatives. But government programs, even well-intentioned ones, often have unforeseen effects. Incentives matter. That’s a piece of science that the president and his party should start paying attention to.

“It's enough to make you wonder,” IBD writes, “how much more growth we'd enjoy if other parts of Obama's ‘middle class economics’ were jettisoned.”