Prediction by Phil Levine Included in Wall Street Journal Article
A recent article by Wall Street Journal economics editor David Wessel examined flaws in the U.S. unemployment system which can leave the economy vulnerable and quoted a prediction made by Wellesley College economist Phil Levine in 1997 about the stability of the system.
"While financial regulators force banks to shore up their defenses so they'll be less vulnerable in the next deep recession, several states are changing unemployment-insurance systems in ways that will make their residents more vulnerable the next time around," Wessel writes. Explaning that when states cut benefits when times are good, they end up leaving themselves without money when a recession hits.
"The system, as crafted, wouldn't have lasted if Depression-level unemployment persisted, and it has been strained by the recent deep recession and tortuously slow recovery," Wessel wrote, "This was predictable. Back in 1997, Wellesley College economist Phillip Levine said the system was 'financially weak and subject to insolvency should a major recession occur.'"
Read "Flaws in U.S. Unemployment System Leave Economy Vulnerable" on the Wall Street Journal website.