Friday, June 24, 2011

Problems with Government unemployment insurance programs

The Federal and State governments created unemployment insurance programs as the nation lingered along in the Great Depression in the 1930's.  The enormous job losses in the Great Depression were devastating to the workers who lost their jobs and their families, but also to the effort to restart the economy.   When a huge part of your workforce is unemployed and completely without income, your consumer base is decimated.  Unemployment insurance would make job loss less devastating for workers and also allow unemployed workers to continue to contribute something to the economy as consumers.


Now, 75 or so years later Democrats and Republicans in Congress still fight over the unemployment insurance program, mostly over extending benefits to the long term unemployed.  Democrats tend to assume they are all innocent victims of the economy, Republicans have a suspicion many are shirkers who like getting money for free.


Both are extreme positions not reflective of the total reality.  For various reasons some people who lose their job may work really hard at finding another position but still go long periods of time without getting reemployed through no fault of their own.  Their job may have disappeared under a wave of new technology so they need retraining.  The job market may be really dead where they live and they can't afford to move because they are tied to a house they cannot sell.  They may be physically limited in the types of jobs they can perform.


Other people either because they are feeling a little depressed and helpless, or they are feeling angry and entitled, or they are just too laid back for their own good, may ride unemployment for long periods of time making little or no effort to seek new work.   


It seems to me there is a middle ground between the Democrat view that everyone on unemployment is a victim working hard to get another job, and the Republican view that they must all be slackers if they haven't got a job yet.  Here is what I suggest.


People who go on unemployment should be entitled to benefits in much the same way as the current system for a period of time.  At a certain point, however, they should be required to do a certain number of hours a week of volunteer work for Government or non-profit organizations to continue to receive unemployment benefits (and continue to be required to document their search for work).  The longer they are on unemployment, the more hours per week they will be required to work to retain the benefits.  The  organizations employing them must be required to keep records on their job performance and some form of publicly available evaluation of the individuals performance, accessible to potential private employers.


I have known a few people in my life in jobs that allowed them to use regular periods of unemployment as periods of paid vacation.  I suspect they take far more out of the system than they ever contribute in unemployment insurance taxes.  So we should also adjust the law to take into account people who are repeatedly on unemployment over their working career by making the initial period where no work is required become shorter each time they go back on unemployment.  


It suits the political needs of Congress to deal in extremes, they have no motivation to fine tune the unemployment insurance system.  The system won't be improved unless we the voters demand it.

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