Stimulation-palooza: Why are we extending unemployment benefits?
The House will vote later today on its borrow-and-spend rebate deal. The Senate is pushing the inevitable lard-up. Democrats and Republicans alike want an extension on federal unemployment benefits. Regular state unemployment insurance covers 26 weeks.
Several GOP senators backed the proposal to extend unemployment payments for 13 weeks for those whose benefits have run out, with 26 more weeks available in states with the highest jobless rates…
“Many of these additions have bipartisan support, and I hope that the president will recognize that the White House needs to negotiate with the Senate as well as the House,” said Sen. Susan M. Collins, R-Maine, who backs both the rebates for seniors and the unemployment extension.
Sen. Olympia J. Snowe, R-Maine, a Finance Committee member, called the unemployment extension “critical” and said she supported ensuring that the rebates reached the elderly.
A program intended to be a safety net has become an excuse for people to remain unemployed once they lose a job by discouraging job search activities until benefits are almost exhausted.
Even the Clinton administration apparently understood the perverse consequences:
Sen. Charles Schumer and other senate Democrats are threatening to hold up the legislation unless it includes extended unemployment benefits. They claim that this is the most important part of the stimulus package precisely because it will help those who are neediest, who are most likely to spend their money because they are the neediest. But this has even less to do with “stimulus” than the $300 checks.
The Democrats may convince some that they are pushing for this out of “compassion,” though they never once advocated longer or greater unemployment insurance benefits during Clinton’s administration despite an average unemployment rate that was higher than the 5 percent rate that we face now. The most likely reason is simply politics. They know that extending unemployment benefits will increase the unemployment rate, thus making it easier for Democrats to use the economy as an election issue.
Dozens of economic research papers indicate that when you extend or increase unemployment benefits, you lengthen unemployment, because recipients wait until their benefits have been exhausted to take their next job. Even the economists who advise the Democrats know this. Larry Katz, the chief economist at the Labor Department during the Clinton administration, co-authored a study that found that workers are almost three times more successful in finding jobs when benefits are just about to run out.
So what will increased unemployment do? It will reduce production. Exactly the opposite of what the “stimulus” package claims to do.
I repeat: God save us from bipartisanship.
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I second that notion.
okay I know this sounds kinda crazy, but as someone who may be unemployed in the near future and is considering NOT going back in the workforce so I can homeschool my kid, I like the idea of getting ALL my money back. I mean I’ve worked steady for the same company for the last 3 years, I paid INTO unemployment, dammit, I want my money back. If they’re going to cut something, I would think it would be something that the receivers are NOT paying into…say WELFARE.
just saying….
Because the malt liquor and dog-racing industries need stimulation too?
Pretty soon the Dems and their enablers will want to extend unemployment benefits for 52 weeks.
I thought a part of stimulating the economy was to get people back to work. What does unemployment benefits have to do with that? 2 reasons: votes, socialism. Where in the Constitution are Federal umemployment benefits anyway? States, yes, Federal, no.
The so far unmentioned problem with this is the “doubledipping” that is going to happen …
Anyone that would be eligible for this “extension” of up to 39 weeks has already drawn the current limit of 26 weeks … that means they became unemployed within the last 6 months or so … which also means they are most likely going to get the “rebate” checks as well …
Pick your state … and I don’t care which one you want to select … the additional 39 weeks will come to multiple $1000s of dollars … then add in the “rebate” of a couple more $1000 if married and several kids …
Why look for a job? Making plenty to get by on sitting on their butts.
With luck I will have a job again before this nonsense is available for me to spend.
Might be different in your state, but in most states, unemployment is an employer tax, not an employee tax. So you probably have not actually paid into unemployment, and thus, have no money to get back.
Don’t forget about people collecting unemployment and working under the table. Now they get more taxpayer money while not paying taxes on the “off the books” job they have. Isn’t this a great country?
If employer tax goes up because of extended benefits, who pays for it? Yep, not the employer.
We had a very good example of what people do with “free” g-ment money a couple of years ago. Remember the $2,000 checks for Katrina folks? It was not pretty but I guess certain things did get stimulated…
Which will be more effective? The tax rebate stimulus, or the extended unemployment de-stimulus?
To shimauma2:
Any money you paid in is long gone. There is no account you pay into. It isn’t a Christmas account. It is taxes. They are spent when received.
Besides, even if there was an account, you would get all you paid in in a very few weeks. Then you take money from someone else’s taxes. They will pay for you to stay home. Enjoy.
Unemployment benefits are not enough to get by on. The welfare types haven’t worked long enough to collect benefits anyway, so touting this as welfare is not accurate.
Back in 2001, I was out of work for 7 months and yes, I have a bachelor’s degree and was looking as hard as possible for work. The unemployed I can sympathize with.
Why not just solve the problem? Deport a few illegals and watch the unemployment rate drop
Actually, the way it works, at least here in NY, is that the employer pays an amount to the state based on a formula. Not-For-Profits also have the option of “self-insuring” unemplyment, meaning we can pay our actual unemployment costs.
Botttom line: Unemployment is paid by the employer and not by the tax-payer, although I suppose you could say it is paid by the consumer who does business with the employer.
Just wow.. it seems everything coming out of the government these days (from either side) is a message to live way beyond your means, break the law, abuse privileges, and don’t lift a finger to contribute. SAid it before and I’ll say it again, I’ve lived through that in another country that is now near economic ruin, and it is exactly what is happening here now. There is nobody on either side willing to do anything about it – the US is doomed, I no longer have any hope.
I respect what you’re wanting to do there, but unemployment benefits are not actually meant for people who have no intention of working(even for a good reason). Their meant to tide you over while you look for a job.
Here in Alabama(can’t speak for any other state) you have to go on at least two interviews every week or you bet cut off; also you can’t turn down any job that’s offered to you or you lose the benefits. I’m sure there are loopholes, but that’s the law anyway.
Also, as has been pointed out, unemployment insurance is paid for by employers, not workers. So, although I have no doubt you’ve been overtaxed, you don’t technically have any money “coming to you” through unemployment benefits.
See now here’s a plan I can get behind. In the meantime, I am still employed and unlike some folks, I HAVE a savings plan, so there’s no need to get snarky about my wanting the money *I* paid into unemployement back, just like I want back any “extra” tax that’s taken from me. I don’t trust the government with any of my money, PERIOD.
Why don’t we just hand out a million dollars to everyone?, then we can all be millionaires !
Actually the employees pay for it before it makes it to their paychecks. Better benefits = lower wage rates.
sfrvn, that’s what I meant. The consumer eventually pays for all increases dealt by the government to businesses, and we are all consumers. So, when they want to “tax the corporations or businesses”, in the end, it is us who pay for it.
The only reason we are in this financial mess is because of outrageous Government spending and the fact they have outsourced and insourced our Jobs at the alter of the Global Economy.(Forced Socialism)
The immigration free for all is finally coming home to roost.
Don’t forget about the H1B visas that allow employers to hire foreigners in favor of the American citizen too.
5% unemployment is NOT an employment problem!
Actually, the requirement to interview to get your benefits makes things worse. Any time an online employment ad is posted, it gets dozens, even hundreds, of resumes from people collecting unemployment who are not remotely qualified nor interested in the position. However, sending in a resume allows them to check off their interview squares so they can get their check. Meanwhile, that deposits a pile of resume sludge on the computers of the HR folks, who must delete nine to nineteen unqualified resumes to find one remotely qualified one.
That’s why good job positions are posted online for only a few hours. They collect so many trash resumes they have to shut them down quickly as soon as they get three interviewable prospects.