Does Unemployment Insurance Encourage Unemployment?
On several occassions over the past few weeks, I have expressed the view on TV/radio that unemployment insurance is one factor that keeps unemployment elevated.
The email and phone calls I have received in response have, to put it mildly, not been kind.
So I was happy to read in today’s NYTimes that I am not entirely alone in being a collassal, uncaring, entitled, never-been-unemployed, out-of touch, overeducated-yet-clueless, arrogant, stupid jerk (those are some of the nicer terms used by my “fans”).
Turns out I have company:
Struggling to keep its budget under control after the financial crisis, the [Danish] government in June cut into its benefits system, the world’s most generous, by limiting unemployment payments to two years instead of four. Having found that recipients either get work right away or take any job as their checks run out, officials are also redoubling long-standing efforts to move Danes more quickly out of the safety net. (emphasis added)
Maybe I should move to Denmark.
Categories: My Blog
Doug Huber
Larry Summers (yes, that Larry Summers) wrote a paper while teaching at Harvard that argues this very point.
“…government assistance programs contribute to long-term unemployment (sic) by providing an incentive, and the means, not to work.”
http://www.econlib.org/library/Enc/Unemployment.html
Jared Tobin
The notion that UI doesn’t keep unemployment elevated is absurd. Any insurance system in which premiums are kept artificially low – and independent of the insured’s risk – is going to be vulnerable to exploitation.
Historically there has been a sort of culture of receiving perpetual UI benefits here in Newfoundland, Canada. It’s hard to argue that this sort of thing is not directly related to the nationalized UI system.
Kathryne Rushford
Work Experience
I’ve never been on unempl before and 200 a wk isn’t what I call a reason not to apply for employment
I currently can’t perform Financial Services position do to excess driving involved in position(untreated federal injury), also credit was damaged ( all retirement and savings).
Currently on unemployment ended have applied for postions in 3 states,federal jobs also.
12/06-6/08 Office duties – Apt Complex – answer phones, computer work, call vendors as approved by Manager, record monthly leasing checks, filing, assist with leasing as requested. Also worked at Spring Valley Highlands updating office so inexperienced employees could perform job functions. 10.00 start -11.25 an hour end Maury Abrams –
Buffalo Highlands Apts. Manager Carol Guzy 702-254-0331,702-254-2715
2005-2006 – Taking care of 85 year old. – Leesburg VA 1500 a month gross
pay for 7 days a week. While lawyer was suing EEOC/USPS, I was writing to DOL about injury.
Collecting doctors information sending to who ever asked, and DOL.
12/28/03 – 2/04 United States Postal Service – Clerk – Salem VA 16 an hour reinstated
at 1989 pay rate(supervisor pay rate). Resulted in an injury (Herniated disk in neck +, untreated as of date) – lifting 1000 – 2000 lbs. of parcels a day, that was supposed to be sent to a processing center( all HSN returns), required to work 7 days a week +.Also working out of equipment that is against there own rules(large cardboard containers, metal containers(sit low to floor) post 89 equipment. The postal service can also work an employee 1 day a week if they can’t perform assigned duties, resulting in 1 day a week pay(most Postmasters won’t do this, some will, none should be able to.)
Postmaster-Val Bernys Salem VA 540-389-9214( 10/11 2002 wrote for form 50, 12/2002 applied for reinstatement( as a clerk or supervisor) 4/2003 took inhouse clerk/carrier test. Was told I couldn’t be reinstated as a supervisor do to education ? ). Also have an altered federal form that many people would know is altered(Hundreds). This legal ruling is not listed on there web site nor EEOC’s why ?
Fully insurable when I left Prudential
1/90 – 6/02 Financial Services – Reviewing financial needs – explaining Group Benefits/Retirement plans (have reviewed 100’s of plans). This includes Health Insurance, Disability Insurance, Retirement Plans (Defined Benefits, 401K’s, 403B’s, Roth IRA’s, Individual IRA’s, Annuities), Long Term Care Insurance, Mutual Funds, Life Insurance. Reviewing Social Security Benefits & showing integration of all the above. Providing Asset allocation (Risk Tolerance reviewed), allocation & re-allocation. Sold above as well as personal property and causality insurance. Provided written review & suggestions for financial needs (simple & compound interest as to current needs & future needs) for retirement both younger & older clients and inflation. Kept abreast of changes in laws relating to benefits/taxes. Assisted with forms. All letters from Prudential since resigning are illegal/factually incorrect. There is a class action that was started when I was employed that I was not made aware of until 2008. I reported information to SEC in 2002 who later fined them 55 mil. Prudential – 58,000 a year Bethlehem PA 610-759-6661
9/84 – 9/89 United States Postal Service – Supervisor, Clerk, Letter Carrier
Managing carriers, clerks, training & performing evaluations, handling customer complaints. Managed up to 100 employees. During employment at USPS, I also maintained unit stock reserve (1/4 million in unit stock reserve), Team leader route inspection team, Details to Branch Manager( Reston, Fairfax Station, Turnpike ). Gave weekly presentations to carriers. Was offered 1-year leave of absence when I resigned( as a supervisor). Offered position back 5 years after leaving. Northern VA 35,000 a year (worked in Fairfax, Fairfax Station, Turnpike, Chantilly, Herndon, Reston in a management position)
Managers worked for:
Branch Manager Turnpike – Richard Kohne –Retired, Richard Klare, Billy Collins, Billy Keil, D.Wynkoop.
10+ yrs Dr B T Kronfeld who retired Herndon VA
Education
GED – 1977
College Courses – Human Relations, Accounting, Intro to Business, Business Law
LUTCF – 9/93 (Financial Planning Skills, Estate Planning, Business Insurance, Disability Income Insurance)
CLTC – 3/2000 -Certified in long-term Care Insurance
American College, Bryn Mawr, PA
(Post Secondary Courses)
Completed: Fundamentals of Estate Planning, Life Insurance, Federal Income Tax Law, Group Benefits: Basic Concepts & Alternatives, Fundamentals of Financial Planning, Planning for Retirement Needs,
Law & the Life Insurance contract.
Hobbies
Building, upgrading, trouble shooting computers for friends.
Anon
A flip side:
For every dollar my employer pays me, I cost him an additional 25% in cash.
So $1/hr = 0.75 x or $1.33/hr
For every 8 hrs he pays, he probably gets 6 (coffee breaks, surfing the net, hitting the head, no customers)
So $1.33/hr = 0.6 x or $2.22/hr
Then he needs a return on that money, say 20%, or it is not worth it for him to do.
So $2.22/hr = 0.8 x or $2.78 for every dollar he pays me.
This doesn’t cover his other costs, such as providing the building square footage, the desk, heat, lights, phone, paying the people that support my job, such as human resources and processing the paperwork associated with my presence.
For many jobs, every salary $1 requires about $10 of business income to justify it.
The big question for every potential employee then is “Can I provide positive value to my employer (>10$ return for every $1 paid me)?” and for every current employee is “Do I?”
In either case, if the answer is no, the handwriting is on the wall.
Zack
I really don’t understand the argument if there is one to be made against restricting unemployment insurance. Jeff’s July 16th (see the link) was so interesting to watch. Jeff demonstrates an excellent case for non-extension while his Center for Progress colleague just ignored every word he said and simply asserted that taxation isn’t as bad as everyone knows it is.
http://www.cato.org/mediahighlights/index.php?highlight_id=1384
iamse7en
Even Krugman used to say unemployment subsidies encourage unemployment.
“Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of “Eurosclerosis,” the persistent high unemployment that affects a number of European countries.”
Hey may argue, “I was talking about very generous unemployment benefits.” Well clearly there is an incentive change which creates a trade-off for the unemployed.
Jess Austin
Your experience with the prolific letter-writing of this group, Prof. Miron, supports the proposition that the government-supported unemployed have plenty of time on their hands.
Diana Lee
I found this article very up-to-date and informative as it provides excellent tips to obtain the best possible long term care insurance rates and quotes. With this handy information, you are able to make your decisions more wisely and obtain the best long-term care insurance plan for yourself. It highlights the importance of having long term care insurance especially for the people above 65 years of age in helping them to plan for their long-term care needs.
Marc
“Unemployment insurance … keeps unemployment elevated?”
You probably also think that plants that dry out because of lack of water are not thirsty enough.
If the unemployed are too lazy to work, doesn’t that imply that you would be a millionaire if only you worked harder? Does not that mean you are lazy too?
betty
Of course I’m too lazy to produce enough to become a millionaire. Because in order to finally get to keep a million, I have to work hard enough to produce 3 million worth of work given how much direct and indirect taxes will take out.
cmotrading
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Cindy
Now I feel stupid. That’s ceaelrd it up for me
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