Dr. Keith Hall presents on unemployment and the economy for this Capitol Hill Campus event.

1. Slide 1: Main Points
Income Redistribution
• Increasing share of government spending is
transferring income from current or future
taxpayers to the jobless.
Government Dependency
• Hit record high. Will ever return to “normal” level?
Nothing Helps Like Jobs
• Joblessness impacts government spending. It is
not so clear that the reverse is true.

2. Slide
2:
Employment
Ra1o
66%
64%
share
of
working
age
popula1on
10.5
million
jobs
62%
60%
58%
shaded
areas
denote
recession
56%
1990
1995
2000
2005
2010
Source:
Bureau
of
Labor
Sta8s8cs
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

3. Slide 3: Unemployment Impact on Government
Three types of effects:
1. Slower growth of income slows tax revenue
2. Government spending on unemployed
Increases
3. Government spending on low-income
families increases

4. Slide
4:
Loss
of
Na1onal
Income
$18
$16
$14
Poten8al
GDP
trillions
of
2012
dollars
$12
GDP
$10
$8
Loss
=
$1
trillion/year
$6
$4
$2
shaded
areas
denote
recession
$0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Bureau
of
Economic
Analysis,
Congressional
Budget
Office
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

5. Slide
5:
Current
Gov’t
Receipts
&
Expenditures
(share
of
GDP)
40%
35%
30%
25%
Percent
20%
Current
expenditures
15%
Current
receipts
10%
shaded
areas
denote
recession
5%
0%
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Bureau
of
Economic
Analysis,
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

6. Slide 6: How Does Government
Spending Enter Into GDP?
Four Main Types of Government Spending
1. *Government Consumption (46%)
2. *Government Investment (8%)
3. Transfer Payments (43%)
4. Interest Payments (8%)
*part of GDP

7. Slide 7: Federal Government
Spending and GDP
Four Main Types of Government Spending
1. *Government Consumption (27%)
2. *Government Investment (4%)
3. Grants-In-Aid to S&L Govt (12%)
4. Other Transfer Payments (47%)
5. Interest Payments (8%)

8. Slide
8:
Government
Spending
by
Type
(share
of
GDP)
25%
19.5%
of
GDP
in
2012
20%
Consump8on
&
Gross
Investment
Social
Benefits
15%
percent
Interest
Payments
10%
5%
shaded
areas
denote
recession
0%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Bureau
of
Economic
Analysis
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

9. Slide
9:
Changing
Role
of
Federal
Government
(share
of
GDP)
15%
Consump8on
&
Gross
Investment
Social
Benefits
Interest
Payments
Grants-­‐in-­‐aid
to
state
and
local
governments
10%
percent
5%
shaded
areas
denote
recession
0%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Bureau
of
Economic
Analysis
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

10. Slide
10:
Rise
of
Dependency
Social
Benefit
as
Share
of
Personal
Income
20%
18%
16%
14%
12%
percent
10%
8%
6%
4%
2%
shaded
areas
denote
recession
0%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Bureau
of
Economic
Analysis
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

11. Slide
11:
Receipt
of
Social
Benefits
by
Type
15%
shaded
areas
denote
recession
Unemployment
Compensa8on
Other
Social
Benefits
Means
Tested
Spending
(approximate)
share
of
personal
income
10%
5%
0%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Bureau
of
Economic
Analysis
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

12. Slide 12: Programs Targeting the
Unemployed
1. Unemployment Insurance
• Unemployment Compensation
• Trade Adjustment Assistance
• Disaster Unemployment Assistance
2. Healthcare Assistance
• Health Coverage Tax Credit
• Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA)
3. Job Search and Training Assistance
• Workforce Investment Act of 1998
• Wagner-Peyser Act of 1933

13. Slide
13:
Unemployment
Compensa1on
$180
$160
$140
billlions
of
current
dollars
Emergency
$120
Other
$100
$80
$60
shaded
areas
denote
recession
$40
$20
$0
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Bureau
of
Economic
Analysis
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

14. Slide 14: Means-Tested Programs
• Low income, available regardless of employment status
• 126 different federal programs
• Largest programs (billions)
o Medicaid
–
$417.3
o Supplemental
Nutri8onal
Asst
Program
(SNAP)
–$74.6
o Supplemental
Security
Income
–
$52.6
o Earned
Income
Tax
Credit
-­‐-­‐
$56.6
o Child
Tax
Credit
–
$28.3
o Federal
Pell
Grants
-­‐
$41
o Temporary
Assistance
for
Needy
Families
(TANF)
–
$21

15. Slide
15:
Trends
in
Social
Benefits
and
the
Jobless
Rate
25%
50%
share
of
working
age
popula1on
20%
45%
share
of
personal
income
15%
40%
10%
35%
Social
Benefits
5%
Jobless
Rate
(right
axis)
30%
shaded
areas
denote
recession
0%
25%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Bureau
of
Economic
Analysis,
Bureau
of
Labor
Sta8s8cs
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.

16. Slide
16:
Trends
in
the
Poverty
and
Jobless
Rates
25%
50%
share
of
working
age
popula1on
20%
45%
share
of
popula1on
15%
40%
10%
35%
Poverty
Rate
5%
30%
Jobless
Rate
(right
axis)
0%
25%
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
Source:
Census
Bureau,
Bureau
of
Labor
Sta8s8cs
Produced
by
Keith
Hall
,
Mercatus
Center
at
George
Mason
University.