Unemployment Comp: How Much is Too Much?


Jobs are — or should be — the number one priority as economic recovery (in that sense) remains elusive. For those currently without jobs, however, how much unemployment compensation is too much? It’s a tricky question, but one that is starting to be asked by more than a few people.

The unemployment comp program, created during the Depression as a temporary aid for laid-off workers, is now termed by some as an "expensive entitlement." While those out of work once received six months of payments, that has now surged to as high as 99 weeks in some states. Half of the more than 11 million unemployed have been jobless for longer than six months.

This is a downturn unlike any other since the program was created and many of those jobs will likely not come back. And while the vast majority are very likely doing all they can to find meaningful employment in the effort to return to their previous lifestyle, nearly two years of unemployment benefits has also undoubtedly led some to adopt the option of "let the government pay the tab" for awhile.

Few seemingly agreed with Kentucky Senator Jim Bunning’s recent filibuster that delayed the latest unemployment benefits extension (he wanted Washington to find a way to pay for it), but his logic was accepted in some circles. Colleague Jon Kyle of Arizona commented that the continued benefits are a "disincentive for people to seek new work" and that no one can argue that the current system is a "job enhancer."

Employers pay the bill through taxes in nearly all states (a few require worker contributions). Benefits have been extended before, but rolled back when the unemployment rate declined. That decline is proving difficult to achieve this time around.

A Washington Post article this week included the following:

"It is appropriate and natural for Congress to extend the time limit of unemployment insurance with the job market as bad as it is," said James Sherk, a labor economist at the Heritage Foundation. "But by quadrupling it, it is no longer an unemployment insurance program but a welfare program."

Phillip L. Swagel, a former Treasury Department official who is now a business professor at Georgetown University, said that some people might take longer to find a new job as a result of unemployment insurance extensions, but that right now it’s a needed benefit.

"The reality is that it’s hard to find a job even for people who really want one," he said.

But as the job market improves, Swagel said, unemployment insurance extensions must be pared back quickly, as they have been in previous downturns. "It’s important to let the extensions lapse as the job market recovers — to avoid having disincentives to work once the job market is better," Swagel said.

Part of the question is timing. For a program that is currently costing $10 billion a month, that’s something that needs answered sooner rather than later.

One thought on “Unemployment Comp: How Much is Too Much?

  1. To All Concerned about unemployment,

    The obvious answer is to provide jobs, and not to pay workers for providing no work. All the time I have been on unemployment I wished that I could be doing something to earn the money the government was providing. There needs to be a return for every dollar invested in the workforce. There needs to be accountability. Please concentrate on putting people back to work. Just conducting a job search, and successfully filing for weekly unemployment benefits should not entitle anyone to a paycheck. There needs to be an exchange of effort, on the part of the recipient, to provide a product or service that will make a positive contribution to society. There needs to be an opportunity provided by the employer, to the workers, to use their previously acquired experience, skills, and education, and to gain new experience, skills, and education through on-the-job training.

    Finding yourself on unemployment is one of the most miserable experiences in life. The best way for the government to improve that situation is to set a goal to create one new job for every job lost. Please focus on that goal in the future, and quit promoting the philosophy of providing something for nothing. It hurts the recipient, and it hurts everyone else. To appreciate anything, we humans need to earn what we get. That is what is best for our life as a whole (emotionally, physically, and spiritually).

    Sincerely,

    Steven J. Wells

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