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  • Unemployment Insurance Discouraging Work and Gainful Employment

    The front page of the Washington Post yesterday features a story by Paul Schwartzman about a couple in Indiana who were laid off from an RV plant and are receiving unemployment insurance (UI) benefits to the tune of about $700 a week ($268 for her and $390 for him). Buried deep into the story on the third page of the article it mentions that the wife, Kelly Nichols, actually got offered a job as a bookkeeper for a chiropractor. It paid $8 an hour for 28 hours a week. Kelly turned down the job because UI pays her more to remain unemployed.

    Since the economic downturn, Congress and the President have extended unemployment benefits and also included a major expansion of the program for states willing to participate in the Stimulus package.

    While their intentions were good, helping those who have been laid off in a tough economy, they have created a disincentive for people to return to the workforce. Unlike welfare, UI does not require any kind of enforceable work requirement and only requires recipients “look for a job,” which can be met simply by reading the want ads in the daily paper. People are able to receive benefits for months, or in some cases years, without actively having to do anything to improve their employability

    The welfare reform law of 1996 that created the Temporary Assistance for Needy Families program (TANF) mandates that all able-bodied recipients work a minimum of 20-30 hours a week. The success of this program saw a decrease in the number of families on the caseload from 4.4 million in August 1996 to just 1.7 million families in June 2007. This kind of work requirement has demonstrated that it can reduce enrollment, reduce unemployment, reduce the cost to taxpayers, and overall help families become self-sufficient and less dependent on the government. The UI program, on the other hand, creates a disincentive for employment and furthers dependency.

    Congress would be wise to reconsider its strategy on the UI program and instead reform it along the lines of TANF. Recipients of unemployment benefits should be encouraged, not discouraged to take jobs and/or actively participate in job training activities. Employment and personal earnings should be the goal– not longer, unproductive stays on UI.

    Posted in Economics [slideshow_deploy]

    29 Responses to Unemployment Insurance Discouraging Work and Gainful Employment

    1. Jim, Richardson TX says:

      The way UI works in my state is that your benefit is based on a recent 12 months of employment. If I take a 'paper or plastic' job in the meantime, when my benefits are re-figured, some of the higher income months will no longer be included, and my benefits will decrease. And any time I spend at the 'paper or plastic' job will be taken away from seeking re-employment in my profession. So I will pay a price for taking a short-term, lesser paying job, and may not ever get back into the real market.

    2. Whicket Williams Kin says:

      I believe in helping people help themselves. I do not believe in giving anybody a free ride. The smaller, more local a government is, the more effecent it is in all aspects. The answere to ALL of our problems is to take power from large centralized Govenment, and Move it to the States, and from there into counties, and on down into preciencts, and even subdivide those when they get to large. That is the only way you can eleminate waste and fraud.

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    5. Justin S, MN says:

      Unfortunately, the stimulus that Pres. Obama passed extends UI in most states to nearly 2 years. Imagine how nice that will look on the resume?

    6. Will Franklin, the G says:

      Texas Governor Rick Perry has taken a lot of heat from Democrats and his fellow "Republican" Senator Kay Bailey Hutchison for rejecting 556 million in unemployment insurance stimulus dollars with federal strings attached. To get the money, Texas would have had to change its law and grow the government unemployment program to suit Obama's standards.

      Perry said "thanks, but no thanks" to that portion of the stimulus money, and in response, KBH (who is also pro-choice) has staked a big portion of her candidacy on criticizing him for doing so. Every small business group in Texas, along with nearly every other right-of-center group in the state, supports Governor Perry on this issue, yet Hutchison periodically attacks Perry's decision and attempts to justify her support for expanding government unemployment insurance.

    7. Jack Lohman says:

      Absolutely. We must put requirements on the dollars. Work for Welfare in Wisconsin worked. Twenty hours of mandated volunteer work and twenty looking for a job. The volunteer work may either lead to a job, but at the minimum adds experience and new skills.

      Jack Lohman

    8. Linda Carlsbad, CA says:

      They know exactly what they are doing. More people on unemployment makes them lazy, why get a job when you can get a check. This is why Welfare works so great, once you get the check, why ever get the job. This is a bad economy and good people can't get jobs. But this administration knows what they are doing, you can control people if you control their money.

    9. Natalie, TX says:

      Will, I agree with you. Perry is a true conservative and Hutchinson is a true RINO. Perry didn't accept the stimulus money because it would mean increased taxes for Texas citizens. He also is going to fight for our 10th amendment rights if our Congress passes the Obamacare bill. Sign the petition… http://notintexas.org/

    10. Lynn B. DeSpain says:

      Unemployment benefits will keep some from seeking work, just as food stamps will keep some from enjoying a great steak. They both are temporary measures only, to be used in emergency times. The majority of citizens do just exactly that, others make a life cycle of it. Always have and always will. They are the ones who shout the loudest for 'Free Medical Care, Free Education, Free Anything, just so long as it is Free.' Those same people use bankruptcy in the very same way, as a form of balancing their accounts at everyone else's expense.

      I do not consider leeches such as those, Americans, and do not choose to support them.


    11. Terri from Ok says:

      The key to returning to individual responsibility is understanding "beggars can't be choosers".

      If people on "assistance" could not avoid the fact that they are taking from their productive neighbors, perhaps they would be less eager to take it.

    12. Scott, IL says:

      In Illinois the unemployed are allowed to make a

      certain amount of money before losing any benefits. I don't know the exact amount but it's something like 50% of your benefit. It's not a cure but it helps.

    13. Bobbie Jay says:

      That is all this administration has been doing is discouraging employment in the private sector, as they deceivingly, demonize it while stealing from it and using private sector ideas to look good.

    14. Jim Bradley Indiana says:

      Kiki, And the person who hid their name.

      I am 57 years old served God and country. I have had four jobs my whole life. i worked one of them 25 1/2 years. i lost this job because of age and mostly for following my Christian Morals. I am not crying the blues at this My Jesus has provided for me and my family. my Wife and i are raising 3 grandchildren with no help from the government because we own our home. i don't know your age or where you and the nameless person live and if you own a TV, or radio, or get a news paper. Their are no Jobs out their. I am one of your ungainly employment seekers as you two and others say. For seven months I have looked ungainly for a Job. I will not take one of those 6 bucks an hour jobs that you call $8.00 hr jobs I get $281 a week i am still losing over 200.bucks a week. i don't know what closet you people have been living in. or your gainfully rich, its obvious that you have not had to feed yourself or your who ever. you have not been looking for a job in this country. (America).this president has all but bankrupted this Great nation. Bush did not help but he is not the blame for this mess we are in now. I and millions of Americans don't look at this money as well fare, we have paid more taxes, paid for it with Real Jobs hours at it that you have never nor will. We Older men and women are seeing our Social security being given to illegals, and they get Free health Care,if not for the VA i would have nothing. we are losing our jobs to foreign countrys by the same leaders that you vote for. unemployment is "not" Well fair. At this time it is Life support. Gain more Knowledge before you make blank mind statement. 99.8% of the people on your wellfare plan are looking for work.

    15. Mark Hartgerink says:

      I do not blame her for turning down a job that pays $8 per hour. You cannot live on that. I doubt anyone in her place would have taken that job. You have to do what is best for your family. Being at work for 40 hours to make less or collect UI is not a hard choice to make.

    16. David VanNorman Wi says:

      She is stupid as weell as lazy.If she took the she more than likely have been eligable for a partial which would have paid more total, at least in PA it would have.

    17. Nick , Wisconsin says:

      Unemployment is a very small stop-gap in WI.I don't know about other states. I will say this: when you are making good money for many years and you live well within your means, trying to do the right thing, and you lose your job, well, that is bad enough. Now you have to collect unemployment, which pays much less than your previous take-home pay, to try to make ends meet. That is bad enough! Then some idiot thinks you should take a job that pays even less than that, it's just appalling! when you have to pull money out of your savings every week to make the bills and just to live because unemployment pays so little is not something you do because you have to. If you take a job making less than unemploy, you spend your savings even faster. It doesn't take real long to get real broke. And if both husband and wife are now unemployed, you are truly up the creek! And the idiot from the Post thinks this is a good move for one of them to take a job paying less than unemployment? Then they end up on welfare. Now just how the hell is that supposed to help anything?

    18. jim smith says:

      Nobama's constituency includes the career-unemployed, union thugs & bosses, government employees who do nothing right, mind numbed robotic fanatics and other assorted rabble. These folks are not America as they contribute nothing except a few thousand sub-standard vehicles at obscene wages. Nobama needs to be stopped now!

    19. E., Clack. says:

      This unfortunately works both ways: as of today I "lost" my unemployment because I just made to the dollar the amount that my benefit was. I have a four year business degree in management, speak several languages fluently, went to boarding school, traveled, lived, worked internationally, received some very good education and an outstanding/cultural upbringing with good work ethic. Today, it was sobering to see that I now work 30 hours and still just make as much as unemployment. I prefer work by far, but it's almost as demoralizing as unemployment. No incentive, I just motivate myself and am proud and glad that I'm able/wanting/willing/and diligent. It would be nicer to be rewarded more for work than unemployment.

    20. Anthony, Pa says:

      The point is being missed here. Most people work jobs for pay AND GOOD HEALTH BENIFITS. Why should anyone be forced to take an 8 dollar an hour job, with no benifits.

    21. Lynn, Ga says:

      What about those who have lost a job and have no intention of looking for work? Maybe they would have retired anyway, or just want some time off, so they file for unemployment with no intention of finding a job, pull in the "extra" money from unemployment until it runs out. I hear about this all the time. They just sit back and receive UE. This is the problem with this system. It's too easy to take advanage of. Can't government have more controls in place to prevent this from happening? No wonder our country is "broke"… What has happened to our society?

    22. Matt, US says:

      Unemployment should be offered until a job is found for the individual. If the job does not work for the individual they should either get their own job within 3 months. If they do not find their own job within 3 months they should have their unemployment taken away. It is temporary assistance, not permanent just because you don't like your new hourly pay. It's your fault you didn't make yourself important enough not to be let go.

    23. Aurora, TX says:

      My husband and I both lost our jobs within a month of each other. My boss died suddenly and the business had to close. My husband's department was taken over by an outside foreign company and 28 people got the boot. Neither of us collected much in UI, but my husband gets the maximum benefits because of his prior income. He also collects a full severance on top of his UI benefits, plus his health insurance COBRA payments are covered by his old employer. Me? I had to fight for my UI benefits because of my boss's death, and I got very little… less than $200/wk and no severance, and the health coverage was just for him. My insurance disappeared when my boss died and hubby wasn't able to add me to his plan before the layoff, so I have no health insurance anymore, either.

      Now, I just got a job that I had to accept because of the rules regarding "suitable work" in Texas. This job pays me less per week than my husband gets on his UI benefits.

      How do you think I feel, getting up every morning to go to work at a job that pays less than my husband's armchair money? And he can be much more leisurely and selective about which jobs he takes, since he doesn't have such a hard financial pinch on him to "just take any minimum wage job that comes along", or face losing what tiny little crumbs happen to fall on his plate through UI.

      The only thing that keeps me going is that I like the work that I'm doing, and I get a 2 to 3 hour lunch break every day. Sorry, but $9/hour doesn't cut it compared to what I was making previously– but it was considered "suitable work" so I had to accept.

      Personally, I feel that the definition of "suitable work" ought to include a wage provivion. A job ought to be considered as suitable only if it pays within 10% of your previous salary. I was making $13/hour, so for me that would mean that I would not be required to accept less than $11.70/hour. That stops people from having to take minimum wage jobs just to satisfy the UI people, and then having to take welfare, food stamps, etc. just to make ends meet.

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    25. Andrew/Pennsylvania says:

      It's unfortunate that people who are currently employed, are able to put a roof over their heads and feed their families, don't understand or don't get what it is to lose 1/2 of your paycheck from being laid off, not to mention COBRA benefits that, while discounted at 65%, still doesn't make that health insurance affordable. Nor do they also not get what the current job market is like, with dozens of people vying for one job. I know, as I am one of the unemployed and have been out in the job market looking for work. Apparantly, those who are employed are the "experts" on the unemployed and what they do or don't do. How sad is that??

      Right now, on unemployment, I am making, based on a 40-hour work week as a guideline, about $9 an hour. Where I live, only Federal taxes are taken out of my check (yes unemployed people are taxpayers too!!). No state taxes, Social Security, Unemployment Insurance (yes, in PA I paid unemployment insurance for many many years!!), local wage taxes, are required to be paid while on unemployment. If all these taxes were to be added back in, then I would need to make another $3-$4 an hour more just to offset all the taxes removed from my paycheck if I was working. And this doesn't even include any medical/dental benefits which would further drag down my paycheck each week. In some states, both Federal and State taxes are taken out of unemployment checks. I can't say that there aren't a few bad apples in our bunch that do take advantage of the system, because there is. But that is no reason whatsoever to cast the same net over the millions of us unemployed who only want one thing and that's a job that pays a living wage, with health benefits. We were all hard working people paying our taxes and bills, feeding our families, and contributing to our local economies until we were laid off from jobs for no reason, out of our control. Don't treat unemployed people as second class citizens!!!

    26. P.T. Cincinnati ohio says:

      You know what.. bad things happen to good people. Good, hardworking people get laid off, get sick, etc. through no fault of their own.

      I had a great job with $13/hr + benefits. The company got bought out by a competitor and my job was phased out.

      The possiblity of getting another, similar paying job in my area was simply impossible. There simply wasn't enough work to go around. So I was forced to take a fast food job at $7.80 an hour and simply ACCEPT THE FACT that I was no longer going to the have the same standard of living that I was used to.

      yes it sucked to see my car repossessed, it sucked to have to sell my furniture and electronics and move into a 1 bedroom apartment in the ghetto and it sucked getting up every morning at 6:30am to go to a fast food job where I was told flat out I would never go anywhere in that company but that I should be grateful for having a job in the first place when so many didn't.

      If you are used to the standard of living that a $40,000 a year job brings and you lose that job and are faced with losing everything you own, I know it sucks.. but THAT IS LIFE. Sometimes we have to accept the fact that life isn't fair and that bad things happen to go people.

      But that is no excuse not to work for a "non-livable" wage. OF COURSE $8 an hour won't support a $40,000 a year lifestyle. FACE IT, THAT LIFESTYLE IS OVER FOR YOU! GET OVER IT AND WORK ANYWAY and learn to live with a lower standard of living!

      After 3 LONG years of fast food work, a position opened up at another company and I found a job..but for 3 LONG LONG YEARS I suffered as the working poor. It didn't kill me. It made me stronger.

      BEING POOR is not such a bad thing once you get used to it.

    27. PA says:

      Excuse me but you are treating the unemployed as if we are people on welfare, we paid into the system to be protected in such a manner. It is not our faults that many industries found it necessary to cut back due to the crisis of the economy in our country. You say we should look in the want ads. Have you been looking in the want ads lately. For every one or two jobs posted there are 5 to 6 hundred or more applying for the few jobs listed. You act as if this was our choice and that it's our fault. Perhaps you need to be more selective who you vote for. Have you not seen what happened in the banking, real estate and auto industry. It was caused by pure GREED, they submitted falsified information to banks not caring if the banks were repaid, all that mattered was that the broker or the dealer got their money. I'm not saying the banks were not at fault they two became to greedy, charging people all along the way. The people of these country got out of control, corporate America sourced most of our jobs to China so they could pay less and obtain higher profits. We have many illegals working in America for far less money and employers are not following safety codes putting them in danger as well. I am a single mother of 17 years worked to support my children and lost my job in a car dealership and now you want to test me for drugs because I'm collecting unemployment. Are you insain???? I DID NOT ELECT TO BE UNEMPLOYED YOU MORON I'M NOT SITTING HOME SMOKING CRACK WHILE COLLECTING A WELFARE CHECK. Watch what you say God has a way of working mysteriously on people who spit stupidity. Watch out you may be next and find yourself unemployed perhaps they should send you for a drug test!!! God must of loved stupid people he made so many of them and in your case the shoe fits.

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