Long-Term Unemployment Entitlement: KILL IT


It’s time to cut the crap on this so-called “help” and call it what it is: Welfare, then take it out back and shoot it.

About 2.1 million Americans receive payments through federally backed emergency unemployment programs, which Congress adopted starting in 2008 as a temporary supplement to state-level programs funded primarily with taxes on employers, which generally offer six months of benefits. That number has tumbled from more than 3.5 million at the start of the year and a peak of more than six million in early 2010, reflecting not just the gradual improvement of the job market but also new limits that have pushed hundreds of thousands of workers off the rolls before they could find jobs.

These programs are simple welfare, nothing, more or less.

As of last week’s report “EUC 2008″, which is the program in question, had 2.156 million “beneficiaries.”  To put this in context “regular” state unemployment had 2.956 million people receiving benefits as of November 3rd.

“Regular” unemployment (26 weeks) is an insurance program.  You, the employee, pay into it with a piece of every paycheck.  It is prohibited by law for your employer to itemize this as a deduction from your paycheck, but it is a fact that it comes out of your offered wage in each and every case.  In this regard it is a forced insurance program (gee, where do you think the Government got the idea that forcing people to buy insurance — like health insurance — was a good idea?) but the fact remains that “regular” 26-week unemployment compensation is something you paid into, although as an employee it is an insurance program you cannot opt out of.

EUC is a welfare program.  It is entirely unfunded and you paid nothing for it.  It was and is the clear intent of government to blur the line between the two, making you believe you were and are entitled to the latter benefit because “it’s something you earned” when in point of fact nothing of the sort ever occurred.

The problem is that not only does this form of welfare distort the job market, as it encourages people to “hold out” for a job they want rather than taking whatever they can get (or starting their own business, even if it is nothing more than doing odd jobs for money from people.)

It also distorts the picture that people have regarding work .vs. welfare, a hand out .vs. a hand up.

It is my considered opinion that unemployment insurance is something that you should have the right to either buy or not as an individual employee and your employer should have nothing to do with it.  The current system is rife with fraud; in Illinois, for example, it is virtually impossible to prevent someone from getting unemployment even if they are fired for cause.  I had multiple cases when I ran MCSNet where I terminated someone for a blatantly “for-cause” reason (e.g. not showing up for work on a repeated and notorious basis) and they would file for unemployment anyway.  We would protest and lose and the person who got canned would collect despite being outrageously ineligible.

This sort of abuse hurt everyone who legitimately wanted to work at the shop, since their wage offer was originally reduced by the amount that I would have to fork over for unemployment “insurance.”  The fact that any random employee could (and some did) claim this benefit illegitimately and got away with it meant that everyone in the place got screwed.  Oh sure, the amount of the screwing for each employee was relatively small, but that’s not the point — if you steal a dollar or $10,000 from someone the only thing we’re arguing about is the amount of damage, not whether the act was proper.

As a nation we need to fix these problems.  The best way to solve it in this case is to scrap the “unemployment” system entirely, and make unemployment a insurance program that employees can buy on their own initiative.  That in turn would make such a benefit entirely portable and entirely at the employee’s discretion; in some cases people would choose not to buy it at all (e.g. a teen taking a summer job or a second income in a household that is not necessary but enhances lifestyle) where others would want to buy it (e.g. a head-of-household.)  This would also allow private companies to price the insurance for the risk on an individual basis and they’d have a strong incentive to police fraud and claims for “benefits” where the person in question was fired for cause.

Let the hate mail aimed at me for the termerity to suggest that people should work for what they get, and that the scam level in our system be reduced, no matter how slightly, begin.


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