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Tuesday, December 7. 2010

How long should unemployment insurance last?

Mankiw wonders, and concludes:



I should note, by the way, that economists who strongly favor the extension of UI benefits, such as those who signed this letter, also tend to favor more income redistribution in general.  I suspect, therefore, that the foundation of their support comes not from having weighed the specific pros and cons of UI per se, but rather from a more general desire to "spread the wealth around."  That issue is, as I tell my students, more a matter of political philosophy than it is of economics.


 

Posted by The News Junkie at 10:16 | Comments (22) | Trackbacks (0)

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Sure as hell not 99 weeks PLUS another 13 months.

Especially when no one is required to work. At least put them to work repairing parks, cleaning roadways, building basic homes, anything productive.

Not just sitting at home and making a few clicks on the bloody computer.
#1 Ron Snyder on 2010-12-07 10:50 (Reply)
If you spread the wealth around long enough and consistently enough, there won't be any wealth.
#2 JJM on 2010-12-07 11:02 (Reply)
I am as opposed to it as I am Social Security. It's just another tax.

Has anyone ever seen a study as to whether "Unimployment Insurance" is actually viable? That is, does it take in more than it pays out?

(Not that I would agree with it even if it did. It's still taking money by coersion to redistribute to someone else.)
#3 Big___Al on 2010-12-07 11:09 (Reply)
I know too many people who were (are) fat, dumb and happy collecting UI. They look at it as a vacation and it covers their living expenses so they do not have to dip into their savings. They will look for a job when the benefits run out. These are professionals with skills. The bigger problem when they go to look for a job is that the H1-b'ers are taking their jobs for less pay than they, the unemployed, are willing to accept.

Means testing for UI. There are too many free lunchers out there.
#4 KF on 2010-12-07 11:21 (Reply)
Those people have paid premiums to get those benefits for years if not decades.
IMO they have earned the right to collect them and spend them as they see fit.

There are far more (and that's the hard core of the unemployed) who choose to remain unemployed because they're too lazy to work and unemployment benefits and social security are higher than the minimum wage they'd otherwise earn (and many of them probably work on the side and don't report the income, which of course is social security fraud...).
#4.1 J.T. Wenting on 2010-12-07 11:44 (Reply)
Decades? DECADES?!!!

What, are you kidding me? Was that the intent of the program, or was it to be a little bit of temporary assistance?

PS, I'm self-employed, or as is the case right now, self-UNemployed. Hurting pretty bad financially. Nobody's sending me a check from the government.

True, I don't pay the so-called unemployement TAX (phoney IMO), but neither has anyone else, to the extent that it would cover years, let alone decades on the dole.

Don't get me going on this topic...
#4.1.1 Big___Al on 2010-12-07 12:41 (Reply)
Apology to JT:

I misread your meaning. You said they've paid for decades, not that they should receive it for decades. Freaked me out! Sorry about that.

(My main point doesn't change, though.)
#4.1.2 Big___Al on 2010-12-07 12:44 (Reply)
INSURANCE lasts as long as you contracted it with whomever you contracted with.

Government handouts however should be strictly limited in scope.
I'm not in favour of setting short and strict limits irrespective of the case though.
Someone loosing their job who can't find another despite trying hard (and being able to prove it) or being incapable of working because of a disability should get benefits for longer (and probably a higher amount) than those who're lazy and just sit on the couch holding up their hand. That's not at the moment the case.

E.g. several years ago I lost my job in a bankruptcy. Took me 6 months to find another (fulltime) job despite writing several letters a day and going to several job interviews each week.
Why should I be penalised by loosing my benefits that I paid for for years being employed because some lazy scumbag can't be bothered to write a coherent letter to apply for a job (yes, there are people who write letters but sabotage them so they won't get hired, which is why copies of letters should probably be required by the unemployment agency to determine whether you should get benefits or not, as well as signed statements from companies inviting you for interviews as to your conduct during those interviews).
#5 J.T. Wenting on 2010-12-07 11:41 (Reply)
6 months.

I pay into UC, but do not qualify for any benefits under any circumstance, so I'm not too keen on these programs borrowing even more money to pay out endless benefits.

There's a problem in the middle ground between people really hustling to get new work and those who will just milk it to the max. Long term UC discourages people from taking inferior jobs to what they lost. If someone can get by on UC, they can feel entitled to hold out for a job that was just as good as the one they lost in the location where they want the job instead of taking something a little less desirable. That's a problem.

I've taken steps 'backward', and done quite a bit of moving to find work in the past, but I hear people talk like they are entitled to sit on UC because there's no good jobs in their local area. Not good enough.

UC also discourages entrepreneurship. Who wants to risk going out on their own (and losing the right to collect UC) when it's safer to keep collecting and holding out for that good safe local job? My wife hears this all the time from laid off folks who were thinking about going into business or going independent - until they find out UC is out the window.
#6 forest on 2010-12-07 12:22 (Reply)
Everybody I ever knew on Unemployment got a job when the benefits were about to run out.

I know plenty of people on it now. They feel like they just got another year off. That's really how they see it.

Don't these Congressmen know any real people? Don't they know the abuse that goes on? I'm sure they do, but like everything else in politics, they are afraid to say the emperor has no clothes (UI is often abused) becuase the liberal media will crucify them.
#7 Park Slope Pubby on 2010-12-07 13:06 (Reply)
Some pundit said recently on the Internet that the biggest problem with lengthy government unemployment benefits, is that many of those receiving them consider them a form of vacation pay, and spend the time playing rather than looking for work. Meanwhile, their employment skills get rusty for lack of work, study and updating, and they get less and less employable, as those following them into the workforce win the jobs they do apply for.

Marianne
#8 Marianne Matthews on 2010-12-07 15:24 (Reply)
I confess that I'm fuzzy on how unemployment insurance is collected. I have the idea that the employer pays it -- which means it might otherwise come to us as part of our paychecks. But I don't think I'm paying directly into it unless it comes under Social Security.
JTW makes the important point that insurance (of any kind) pays benefits according to an agreement. Unemployment pays benefits according to legislation and subject to the same vagaries as any legislation. So it fails the test of being actual insurance.
I know that the unemployment payment available to me, if I (saints forfend) had to collect, would barely keep my family -- and I've got a military pension. It's hard to believe anyone is having much of a standard of living on unemployment.
#9 Geoff Brown on 2010-12-07 15:25 (Reply)
Hi again, Geoff!

I haven't had a real job for awhile (the self-employment thing), so I had to check with my wife who fortunately does have a real job...

She confirms that there is a deduction from her pay on every paycheck, specifically for unemployment insurance.
#9.1 Big___Al on 2010-12-07 16:50 (Reply)
Huh. I should look harder at my pay stub. It's not like I'd have any choice about paying it, of course, but it does increase one's sense of entitlement.
#9.1.1 Geoff Brown on 2010-12-07 17:48 (Reply)
Why does this require government intervention? If one is working and would like some income security, whatever the government steals from him (via his employer) could just as easily be paid to a private income insurer. It would be something like a flexible annuity.

Those who cannot afford to buy income insurance or exhaust what they have provided for themselves will face more difficult choices when put out of work. But remember, the guarantee is for income, not for lifestyle. If you aren’t working, why should you expect to keep the same quality of life?

Those that are poor will still be poor, and if we want to help them, we can be charitable toward them.

If the government is coercing our help, it is not charity, it is welfare. Call it what it is. Stop pretending that getting a state handout is somehow different (and less shameful) because you use it to heat a bigger house.
#10 foxmarks (Link) on 2010-12-07 16:16 (Reply)
foxmarks,

I don't know why the government should be involved (or where they get the right/have the nerve) in any of these so-called "safety nets" such as unemployment and social security.

It wasn't in the founding documents and ideals, and it sure ain't a "natural right" or a law of God.

They've usurped our freedoms, plain and simple. The sheeple have been complicit, of course, by necessity.
#10.1 Big___Al on 2010-12-07 21:03 (Reply)
Here's something I've misunderstood.
The deal does not extend the period for which people collect unemployment past 99 weeks. It authorizes the 99-week limit for another 13 months -- that is, those who have been unemployed more than 26 weeks but up to 99 weeks can continue to collect unemployment benefits.
That is probably bad policy, but it's a different bad policy than making unemployment available for about 3 years.
#11 Geoff Brown on 2010-12-07 16:51 (Reply)
Employer's contribution to the unemployment insurance fund is based upon how much their ex-employees have drawn from the fund. Coyoteblog explains it well in his 12/2004 post on seasonal employment.

If you subsidize something you tend to get more of it, and some estimate that the unemployment rate is about 0.4% to 0.7% higher than it would be without extension:
nationalreview.com/agenda/231450/how-much-do-ui-extensions-matter-unemployment-josh-barro
That article points out that the incentive to not work is balanced (from a public policy perspective) by"the stimulative effects of ... UI benefits". Unemployment benefits tend to be spent right away, and as a result "increase aggregate demand". "UI extension also helps to avoid events like foreclosure, eviction and bankruptcy, which in addition to being personal disasters are also destructive of economic value."
Of course, most unemployed find jobs in the quarter after they were laid off, or within a quarter of the date that their unemployment insurance payouts stop. So by extending benefits we are just delaying the magical day when the jobs available become the jobs that they want:
#12 Douglas2 on 2010-12-07 18:12 (Reply)
Douglas2

I had forgotten about that aspect regarding the employer. But doesn't the tax or penalty kick in for them only if they lay someone off or unjustly fire them, and not if it was a justifiable termination? Or is there already a base tax that the employer pays, and then it increases with the above criteria?

Just curious...
#12.1 Big___Al on 2010-12-07 20:49 (Reply)
In NY as an employer, you pay into unemployement. If you lay off or fire a employee, and he collects unemployement, he costs you till he or she gets another job. If they work more weeks for the new employer then you, the new employer pays the % of there unemployement, if they get laid off working less weeks for the new employer then the past employer the the past employer continues to get taxed for thier unemployment benefits. I received bills for employees fired for just caused 2 years after thier termination because I was the primary employer, they never lasted long enough with a new employer to build up enough time to make a nother employer the primary. INSANE!
#13 Dennis Lukas on 2010-12-07 23:34 (Reply)
Thanks for the clarification, Dennis.

INSANE pretty much describes it, and our whole system of taxation!
#13.1 Big___Al on 2010-12-08 19:33 (Reply)
You get what you pay for.

Pay for unemployment - you get unemployed people.
#14 NJSoldier on 2010-12-08 20:24 (Reply)

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