Unemployment benefits

[cptacek]

Unemployement is insurance. An insurance premium your employer paid instead of giving the money to you.

It's not charity. There is no shame in taking it - you paid for it essentially.

So I think the benefits should go as long as it takes for you to find a job. Unless you were making minimum wage, unemployment is not much money. You have every incentive to find a job if you can - you want to make money and not loose your house, car, etc and feed your family.

I agree with your first two paragraphs. I agree it is insurance that your employee paid instead of giving it to you in your salary/hourly wage. I also agree that when you are laid off (or let go...anything other than voluntarily quit) you should be able to take it with no shame.

However, the third paragraph doesn't follow. Insurance is a hedge against a known risk. In this case, they know, or at least KNEW, what the maximum was they would have to pay (because of the time limit), and didn't pass some percentage of that amount on to you in your paycheck, in case they did lay you off and they had to pay unemployment. If you got unemployment forever, they would have to pay you a lot less up front to cover the possibility that you wouldn't find a job for 5 years (or more).

I disagree with all the extensions because it changes the rules. It puts more of a burden on companies than they had already figured on.

[cptacek]

Interesting- people are against it until it happens to them.

If you check the poll, right now no one has voted for "it shouldn't exist". Heck, I just put that option there because I thought maat55 would vote for it But even he thought 3 months was ok. I don't get where you think people are against it.

[jIM_Ohio]

However, the third paragraph doesn't follow. Insurance is a hedge against a known risk. In this case, they know, or at least KNEW, what the maximum was they would have to pay (because of the time limit), and didn't pass some percentage of that amount on to you in your paycheck, in case they did lay you off and they had to pay unemployment. If you got unemployment forever, they would have to pay you a lot less up front to cover the possibility that you wouldn't find a job for 5 years (or more).

My wife works in Human resources and has taught me a little about unemployment and how it works. My wife is currently an HR consultant and helps employers administer various programs- she caters to small businesses- some of them might have 2-3 employees, and the largest might be 50 employees.

Her explanation to me was this- employer pays for unemployment insurance, so when an employee collects, they are collecting against their employer's plan. Some of her companies have good employment records- they retain most employees, and their rates are low. As they pay into the insurance, it builds up a "cash value". If no one collects unemployment, the amount the employers have to pay in decreases. The reverse is also true- if an employer has a lot of claims, their rates go up.

As government extends the benefit, the reality is the companies will end up paying more later than they had already paid.

Some of my wife's expertise is in preventing fired employees (employees terminated for cause) from collecting unemployment. She helps build the case so if the employer goes to court, the employer wins and their unemployment rates do not increase.

If extensions are granted, it is "sticking it" to employers because they have to pay into the insurance plan more (because they have more people collecting).

When you look at a 5 person business, and look at their books, anything which makes them have to pay more after letting someone go (to cut costs) start defeating the purpose of hiring that person to begin with. My wife sees these problems all the time when government mandates programs which employers have to pay for.

[cptacek]

Thanks for the info, Jim.

I contend that if the rules said a laid off employee could get UI benefits for 3 years, the employers would compensate for that by paying you less while you are working, and paying into the UI system more to cover the higher cost if you are laid off.

[jIM_Ohio]

Thanks for the info, Jim.

I contend that if the rules said a laid off employee could get UI benefits for 3 years, the employers would compensate for that by paying you less while you are working, and paying into the UI system more to cover the higher cost if you are laid off.

LOL

I contend that if benefits have to last 3 years, my wife's clients would not hire to begin with- too much risk.

For example one of my wife's clients is a gutter cleaning company- maybe 6 employees. I am sure the bottom 2-3 people on that payroll are in the $10-$14/hr range. If the employer is at risk for paying 3 years of unemployment, why hire the person to begin with? If unemployment is 1/3 their salary, they could either
a) keep them for 1 more year at same cost for laying them off now
b) not hire them and make less money, but take on little extra risk
c) hire contract employees and pay less in benefits

My wife explains how this "stick it to the employer" policies of government work. Jobs get eliminated "forever", companies get eliminated (bankrupt) "forever". A large company (like mine) with 50,000+ employees has ways to finance things... we might not have real money in the bank, but have the cash flow to fund or finance operations when times are tough.

These 5 employee, family owned businesses do not have 1 years expenses in the bank- its not the way they operate... they also do not have the ability to finance their payroll (too much risk). Money coming in is spent almost immediately, and some months are better than others... if they get stuck with a "3 year bill" for unemployment, you better believe they will not hire another person to replace that laid off person until business is REALLY booming.

[cptacek]

Good point!

I guess my contention is "best case scenario" and yours is reality!

[jIM_Ohio]

Politicians could argue both our points, and neither would be wrong

[wnlbutterfly]

Sorry...I accidentally hit the wrong button and voted for "no such thing" and I meant the 0-6 months.

I personally know someone that is getting unemployment for Census work. When she took that job she KNEW it was temporary. So not only are we paying good wages for Census workers we are paying for them to sit on their behind between the jobs, and they aren't necessarily calling back the ones that are on unemployment currently. Her other job before that was also a seasonal job answering phones for orders during the holiday. You used to not qualify for unemployment if you worked a seasonal position. I know she has gotten more in UI than what she got in her paycheck.

Everyone that works pays into UI and overall it is a good benefit, but there has to be a line where they say "that's it"! Otherwise UI is going to end up like S.S. Belly up!

[Goldy1]

So when a guy is on unemployment the ex employer PAYS FOR IT? I thought uncle sam did guys.

[cptacek]

Nope, Goldy1. Read Jim's explanation.

I've also read that it gets worse. In New York, if you quit your job, then get hired somewhere else, and then get laid off from that job, the first employeer has to pay for it.

Highlights from the You’re the Boss Blog - NYTimes.com

Here is an even worse situation. In New York (I don’t know about other states), if someone voluntarily quits and takes another job, and then is laid off from that job, the first employer’s record is charged even though the employee quit and would not have been eligible for unemployment after (s)he left that job.

[snafu]

If you take into account those who are not eligible for benefits, those whose benefits have expired and those who feel defeated... the unemployment rate is near 30%.

There are always a percentage of those eligible for UI benefits who will find a way to take advantage of the system without seeking work. Most hourly wage earners are struggling to feed the family, pay mortgage and utilities on 60% of income up to the maximum. The professionals who 'did the right thing,' went to university, racked up horrendous student loans, kept the economy rolling by buying houses, appliances, cars etc. have been 'gobbed smacked' by losing employment, getting paltry UI payments [due to cut-offs], and finding there were 5,000 applicants for every position they qualify for. Some are so emotionally damaged they can't get out of bed, their whole identity was wrapped in their middle management position.

For many this will affect them like the Great Depression affected our grandparents. Life will never be the same even when they get back on their feet.

BTW, many of those who collect UI eventually apply for welfare to be supported by the taxpayer via a different agency.

[Goldy1]

well said snafu..as was the case of my husband. He worked 16 years in the filed of study he worked on and was not laid off ONE single day. He got called back (for now) but he wasn't taking advantage of the system by not working a $9 an hour job while he was in school and actively seeking work in his field and even other fields (he's now employed again)

[am_vanquish]

For many this will affect them like the Great Depression affected our grandparents. Life will never be the same even when they get back on their feet.

I hope you're right about this, but I doubt it. My brother-in-law is a great example. He was unemployed for about 20-24 months. He's another example of how the UI system can de-motivate people.

My sister was also unemployed for about 18 months, with about a full year of overlap when neither of them was unemployed. During that time, they started talking big about how once they both found jobs, they were going to live the "simple life." No more buying things they don't need with credit. Guess what? Since they've both been employed (less than 6 months), they've done the following:
- Purchased 2 new cars
- Moved to a new house
- Furnished that house with credit
- Went on a nice ski trip vacation

[jIM_Ohio]

So when a guy is on unemployment the ex employer PAYS FOR IT? I thought uncle sam did guys.

Your employer pays unemployment insurance- that insurance might be a government run agency, or the insurance is paying the government money.

The government does pay unemployment
The government passes laws to require how long unemployment lasts
that money ultimately comes from your employer though (thru taxes and unemployment insurance).

[jIM_Ohio]

If you take into account those who are not eligible for benefits, those whose benefits have expired and those who feel defeated... the unemployment rate is near 30%.

Funny, I could argue otherwise.

Obama changed the unemployment length...


and unemployment is measured by the number of people receiving benefits per working population

meaning if 100 people collect unemployment and 900 are working, I believe that comes out to 10%.

Now when you extend benefits, you increase the numerator (the 100 can now be 200 because more people can file compared to the past) and now the unemployment rate "doubled" to 20% when nothing really changed except the length of time people can collect.


I know unemployment is "high" right now, but high is relative... IMO you cannot compare this to any other generation because Obama changed the calculation to make it scare people and make it appear worse than it is.

9 of 10 people I know are still working (probably closer to 49 of 50 or 99 of 100. I know one person out of work, and not sure if she has found a new job yet...