My friend Erik, who has prompted posts before (see here for an example), was asking me yesterday what I thought about the unemployment situation. He was advocating limiting the duration of the payments as well as the idea of requiring that the recipients do some work in exchange. I quickly replied, but felt it would be worth a post to more fully discuss my ideas.
First, and I think the most critical element to addressing the situation, is to realize that the unemployment payments are from a pool that is paid in by employers. Employers have very little flexibility in regards to paying in, though as you can imagine, they are constantly fighting to reduce or eliminate those payments. So, just like Social Security payments reduce the amount you might otherwise be paid, employers paying into the unemployment pool are reducing what they might pay you, so really, the money that is being paid has been paid by the employee. Naturally, in the way of all insurance, the many subsidize the few, so each individual who makes use of unemployment compensation likely got out more than they paid in. However, the payment (I know from personal experience, having been laid off and then browbeaten by my wife into apply), for essentially all recipients the amount of the payment is far below any equivalent compensation for full-time work. The idea that the recipients are just sitting on their asses raking in the dough, laughing all the way to the bank is an insidious lie planted in our credulous society by the oligarchy that wants to keep that unemployment payment as additional profits. There will always be a few people who game the system, but it makes no sense to brutally punish hundreds of thousands of desperate people because a handful are committing crimes (it is fraud, after all). But hey, that is how our great society works!
Normally unemployment payments are fixed at a fairly short time period. Six to 9 months is what I remember from my stint, a period that should enable someone with viable skills to locate a new gig, _if_ the situation is normal. We are currently experiencing an abnormal situation: the Great Recession. Really, it is a ‘recession’ for political reasons, by nearly all economic definitions we are suffering through a depression. If it weren’t for the Fed pouring billions into the markets (I got a lot of complaints about their methods and think the recipients should have suffered way more, but if they hadn’t done it when they did we really would be in Depression 2.0 now) AND the scraps of social safety net not shredded over the years, we would be in the depths of a huge depression with the prospects of it taking a decade or longer to pull out of it. Fortunately, the oligarchy wasn’t able to completely strip out the social safety net, so many people were able to get some dribs and drabs of income to keep them from becoming trolls under a bridge. A few people in our government pulled their heads out of their asses long enough to realize that this ‘recession’ was going to last a lot longer than any one in the recent past and were able to kick enough heads in Congress to extend the unemployment payments to keep those poor people from becoming trolls (a very unsafe position to have, what with our deteriorating bridges threatening to crash on their noggins and whatnot). Of course, our idiot society has eagerly bought the lies of the oligarchy (why the the oligarchy cares I can’t be sure, since it is borrowed money that has to be paid by tax payers and the oligarchy pays little to no taxes anyway) and think that extending the benefits (or any other stimulation of the economy) is a ‘bad thing’ and we want to avoid going further into debt (I detail that idiocy here). So, thanks to unemployment insurance that in normal times costs the taxpayer nothing (it is some pretty damn cheap stimulus at present, since every penny will be pumped into the economy, but that is a pointless argument to make to people who have stopped listening), we have been able to stave off Depression 2.0 (at least up to this point). Instead of our society being grateful, it whines and bitches about the trivial expense. Why doesn’t our society whine and bitch about the _trillion_ dollars (when all shadow expenses are added) spent on our military industry complex? And much of it borrowed at that!
So, what about being forced to work for your ‘pay’? I have spent quite a bit of time looking for jobs over the years (working as a contractor means I get paid better than average, but it also means I tend to switch jobs more than average; since I have been nearly continuously employed the whole time, I think I am ahead of the game) and it takes a lot of time and effort. You really can’t do more than two interviews a day, unless you get amazingly lucky with the logistics, and generally you have little or no influence on when an interview is going to happen. As such, working full-time and aggressively engaging in a job search are typically mutually exclusive (thanks to email, though, it is easier, though not easy), so if someone is required to work full-time to get their dribs and drabs of unemployment bucks, that is keeping them from getting off the dole to begin with. There is also the simple financial math of working full-time for a tiny fraction of what you could get at a regular job vs focusing full-time on a job search. What I got ‘paid’ during my stint with unemployment was a joke, and the only reason I bothered was because I could do the whole thing on-line and it took less than an hour a week. It wasn’t even enough to pay even one of our mortgages and guess what? They even taxed the money as well! Fortunately they allowed you to defer tax payment, so didn’t withhold anything. Had I been forced to make a choice between working to get that silly tiny payment and focusing on my job search, there wouldn’t have even been conscious consideration, I simply would have done without that wee little check (actually, they deposited the money into a bank card). In my case I can feel fairly certain that the little money I got from unemployment was more than paid by the length of time I worked without drawing any. And the rules are so draconian! Despite having worked for quite a few years, full-time before going to graduate school, when I graduated and was unable to find a job I wasn’t qualified to get any unemployment payments! Ain’t that sweet!
OK, so if I don’t think people should be forced to work for their paltry few dollars, does that mean I object to government-backed work projects? Absolutely not! I think that this is the _perfect_ time for the government to be doing infrastructure work. Money is cheap, labor is cheap and the economy desperately needs a shot in the arm. By having government backing of wide spread infrastructure projects that helps to soak up lots of unemployed people, which helps to reduce the drain on the social safety net AND society gets this great payback of useful infrastructure. To me it is a silly no-brainer, but I guess we got negative brains in our government and an ignorant (to be generous; I get tired of constantly writing ‘idiot’) electorate that laps up the lies of the oligarchy.
So, to summarize, unemployment payments are a highly effective method of stimulating the economy, way more effective than the trillions (when you add up the nearly interest-free loans) given to Wall Street. Yes, there needs to be a limit on unemployment payments, but I assure you, through personal experience, that no one who is legitimate is making any sort of living off the payments. Sure, there are probably lots of people who have given up on their job search through depression, but they aren’t just sitting around swilling beer and watching the ‘tube because they think they have the perfect situation. They might be swilling beer (instead of feeding their children or paying the electric bill) because they are in the depths of depression and the beer allows them to forget for a few minutes.
Infrastructure stimulus is the best use of our borrowing power, even better than unemployment payments (which are a _great_ use of stimulus dollars!), because it helps to bring down unemployment AND we get an amazing return on our investment in the form of more and better roads, updated bridges, etc., etc., etc.
Having said that, since the stated goal of the GOP (can you believe these idiots went on public record with these statements?) is to oust Obama at any cost, the chance of anything rational or intelligent happening in our government is about as close to zero as you can get. Really, I am confident I could make a persuasive argument that our government is counter productive towards society at the moment.
Depression 2.0 is not gone, it still lurks right around the corner. It could be triggered by an European meltdown, a dramatic slowdown in Asia or even our idiot policies. Though overall things are trending up (sometimes it is hard to see that in the day-to-day noise) and our economy is strengthening, the benefits are accruing to a tiny slice of our society (the oligarchy) and the fundamentals that most people care about (well paying jobs that are secure enough to plan for the future) are weak. It wouldn’t take much to reverse this trend or even push it off a cliff back into the depths.
