Unemployment Insurance or Stealth Welfare?

December 6, 2010

As Congress debates yet another extension of federal unemployment benefits, perhaps it is time to examine the system itself and gain a bit of perspective.

No one disagrees that Unemployment Insurance is a necessary safety net – providing a means to continue functioning when a job ends and to allow for a search for new employment. Unemployment Insurance is set up as a state-run program, providing a minimal income for a set period of time. The maximum payout varies by state, but here in the heartland this maximum benefit is around $300 a week. The maximum term of benefits is 26 weeks, or 6 months.

This is true insurance. Premiums are paid by employers thru a tax, and benefits are paid out when circumstances warrant a claim – up to the maximum benefit.

Unemployment insurance benefits are not intended to be an income replacement for a job. They are a supplement to allow the unemployed worker some minimal income to allow him to eat while he seeks another job. After 6 months, the benefits are maxed out and expire.

This is a reasonable system. No one will starve while seeking work. And since the benefit amount is based on earned income over the previous x number of months… someone eligible for the maximum benefit will have earned significantly more than that benefit amount while working. There is incentive to seek to return to work to maintain the standard of living! (During my last short stint collecting unemployment benefits… the sum total of monthly benefits barely paid my monthly mortgage. I was motivated to seek another job, as my other expenses ate well into my savings!)

Things get muddled when the federal government steps in.

During times of high national unemployment, the Feds institute “extended benefits.” This is NOT Unemployment Insurance. No premiums are paid or collected for these benefits. The program is administered by the states but the benefits are simply expenditures of the Federal Budget.

The currently expiring benefits have run through several extensions. For one’s benefits to be expiring now, they’d have had to be collecting unemployment thru nearly the entire Obama Presidency!

Remember, McDonalds is hiring, and pays more than $250 a week. If someone has been out of work for 2 years, they could get a job flipping burgers for about the same money that unemployment provides. But why would someone who is content to live at that level of income work 40 hours a week for the kind of money the Feds are giving away for them to sit on their rear ends?

To be sure, there are people who are not content to live on unemployment. Myself, for example! During that last stint of unemployment I mentioned, I was unable to find full time work in my field of expertise, but I did find and accept a part-time position. Since I am an IT professional, my part time job nets me, after taxes, significantly more than unemployment benefits pay, though half the income I had been earning. I am one of the under-employed not recorded on the nations employment statistics… but I am a productive worker, paying taxes and meeting my obligations and expenses – though barely – as I continue to seek a suitable career enhancing position.

The Feds have done enough for the “long-term unemployed.” As they drain federal coffers, they have dis-incented millions of potential contributors to the nation’s economy. Workers will not take jobs they consider “below them” when they can continue to collect taxpayer funded subsidy. They will not work 40 hours at a job that will only minimally improve their lot over what the Feds give them for nothing. The Feds CREATE the long-term unemployment problem!

Necessity is a great motivator. When the benefits expire, these people will go out and accept available employment to meet their needs and those of their families. It is time for the namby-pamby spoiled brat children that make up a goodly portion of the American population to find out what it is to take a menial subsistence job that is “below them” and be responsible for themselves. The Depression created innovation. The Depression created character. And the children of the Depression became the “Greatest Generation.”

The “Great Society” spawned the “ME Generation”… and these people have become spoiled, lazy, entitled and unproductive.

The Safety Net exists at the State Level. In extreme times, a single extension of an additional 26 weeks might be justifiable. But to extend these benefits ad infinitum is simply the creation of another Welfare program, without calling it so. It is another case of the productive funding and subsidizing the unproductive.

The time has come for Congress to say ENOUGH.

There should be no extension of federal unemployment benefits. Congress must begin to show some accountability with the tax dollars they appropriate from the productive people of this nation. And it is time for the American people to start being accountable for their own actions, and responsible for their own outcomes.

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