Posted on 03/17/2010 5:46:43 AM PDT by reaganaut1
Unemployment benefits provide a small amount of help to a number of people who desperately need it. But some economists have gone too far by claiming that unemployment insurance is stimulating the economy.
Unemployment insurance is jointly administered and financed by the federal and state governments, offering funds to “covered” people who lost their jobs and have as yet been unable to find and start a new job. The program has been around for decades, but this recession has created an especially large group of laid-off workers who, despite an extensive search, genuinely cannot find another job.
With no new job in sight, a large group of people are under considerable personal and financial stress. In recognition of these facts, the “stimulus” law of 2009 extended the eligibility period for unemployment benefits, and provided additional funds for the program.
Before this recession, most economists probably thought that some amount of unemployment benefits were just and compassionate, and offered a sense of security even to people who were lucky enough to retain their jobs, despite the fact that the program would raise unemployment rates and reduce both employment and economic output.
In other words, unemployment benefits shrink the economy to some degree, but shrinking the economy a bit may be a price worth paying.
Unemployment benefits were thought to reduce employment and output because, by definition, working people were ineligible for the benefits. In particular, an unemployed person who finds and starts a new job, or returns to working at his previous job, is supposed to give up his unemployment benefits. Economists had found that a large fraction of unemployed people delay going back to work solely because the unemployment insurance program was paying them for not working.
Fewer people working means a lower employment rate, and less output
(Excerpt) Read more at economix.blogs.nytimes.com ...
People do the math...they also, interestingly enough, figure out just how much “sacrificing” they will do at the income level that jobless-benefits (taxpayer money) gives them. I know I would, but I also have the motivation to do the right thing which is provide for myself and my family with a pride that is neither arrogant or falsely humble.
If these stinkin rats in government wants to redistribute anything then as a friend of mine sent to me ...”Redistribute my work ethic, not my income!”
Me brudder done told me how it’d been working for him, a year ago. Said he saw some real sad cases where a well-intentioned guy took a new job that didn’t last, but was then unable to get back into the benefit his family’d previously survived on. Bro sez ya gotta think ahead and stay below income limits or off the books ‘cause if something goes wrong with the new job, you can’t go back to the old job’s remaining benefits. Honest guys who want to work, they’re the most likely to end up realizing that the lazier, or the more manipulative, are coming out ahead in unemployment benefits.
FUTA and SUTA are for unemployment... it is a specific tax to keep the economy somewhat stable.
Actually they did pay into the system, it just came out of another pocket.
The so-called benefits we receive at work are part of the package. In order to hire us our employers send us a check to us from the left pocket and send a check to the government for unemployment, workers compensation, etc. from the right pocket.
Health care insurance, for example, was originally a way of raising compensation and getting around the wage freeze during World War II. It’s part of our reimbursement we never see.
Any requirement the government forces from our employers really comes from us the workers.
Hm... lets see... I can sit here and eat Twinkies and drink beer I bought free with food stamps or got free from the local food pantry, in an apartment I get nearly free with housing assistance, bring in over a grand a month from unemployment, get free medical care from the emergency room if needed, all while I do nothing but watch the game on TV and smoke pot...
OR
I can get a job and bust my butt working... lose all my benefits and actually be worse off... Hm... tuff one!
Extending unemployment money keeps unemployment rates higher because of how we measure unemployment.
I have been on UI benefits for over three months. I eat nothing but Ramen noodles, tuna, peanut butter and crackers.
I can only drive into town shortly after the check comes in when I have a little cash for gas.
All my bills get paid, insurance etc. But I have next to nothing left over.
I have to second the observation. I think this is particularly true now that so many households have two incomes. In some (though not all), people can afford to have one of them temporarily replaced by unemployment compensation instead of a full salary. All that is lost is some level of luxury, not the necessities.
Clearly. Each state employment office sets the requirements for the minimum number of required job searches per week. They'll take your word for it for awhile, but you are required to maintain recods of your job searches.
Periodically, if they think you are scamming the system and choose to audit your search records, they need to be able to verify that you actually conducted the minimum required number of job searches per week. They will invite you to the unemployment office with your job search records. Then will then contact each employer you list and find out if you actually submitted a resume or application for a job posting.
For example, if you are a high school graduate, but all you applied for were bank president or CEO positions, chances are you will have some 'splainin' to do. You will probably have to repay every dollar of unemployment as well as a penalty.
When people talk about "protecting their unemployment", more often than not, they're talking about adhering to the rules because failure to do so can be severe.
Unemployment is not free money, nor free vacation cash - it comes with huge strings attached that most people are happy to abandon by finding a real job as quickly as possible.
Conceptually, you are correct, but in practice you are not. The company plays a flat fee for unemployment insurance that goes to the state to cover contingencies such as market downturns or the closing of the business. If the company is moderately sized, the amount "charged" to an individual employees benefits package essentially amounts to a few dollars or less per month. Not enough to be significant.
Yes, I know that. When I was writing the post I on purpose said the individual paid into the system knowing full well it was the company writing the check. I should have been more explicit.
A lot of people don’t realize that the benefits they receive really cost *them* and not the employer. The employer who pays into the retirement package or who pays part of the health insurance premium is really taking the money from their employees’ salaries to provide the benefits.
Thank you for the explanation. And I do confess I have never collected unemploymnent myself.
But I have known several people on unemployment and certainly have never heard or seen any such scrupulous accountability as you describe. I’d be interested if other freepers have info on this. I also know that, beyond doubt, the data would show that the vast majority of people who are on unemployment stay on it until it runs out, no matter how long it runs.
Part of the "joy" (extreme sarcasm invoked) of collecting unemployment is that the unemployment folks routinely and repeatedly let you know what the laws are and what will happen if you violate them. I've not only collected unemployment more times than I wished, but I have also worked as an unemployment call center operator in Florida. We were extensively trained on the requirements to collect unemployment, as well as unemployment law.
Most unemployment tends to be federally mandated, but controlled and distributed at the state level. So, while there are variations from one state to another, to prevent fraud, most states require a minimum number of searches per week and require that a record of those job searches be maintained in the event of an audit which the state reserves the right to conduct at its convenience.
Sorry to be so long-winded about this, but a lot of folks need to be aware that collecting unemployment is NOT Vacation Club Fed. The recipient has to do something to get the money. It ain't free!
Thanks for the info!
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