Sunday, July 18, 2010

Unemployment Benefits Suggestions

Unemployment benefit extension talk is once again in the news. This is a huge issue as millions are on 'emergency unemployment compensation' and have their benefits expiring this summer/fall. No way will the party in power allow millions to have their benefits cut right before an election. These will get extended through November. Does this make sense?

My thought is no. Some people have had unemployment benefits for 99 weeks now. UE was designed as a 26 week program. It was also designed in an era when a recession meant the business world has mismanaged inventories and had to lay off some workers temporarily until demand came back. Those days are long gone. It is often now that unemployment comes with a total career change or comes as an industry shifts production overseas when demand does come back. It is a program that has lost its effectiveness. Does it make sense to keep extending benefits? Does it make sense for the other 295 million Americans, all feeling some effect of the Depression 2.0, to incur more debt for 5 million to have benefits extended 13 or 26 more weeks? Is it worth the extra $34 billion in national debt? No. Will it 'create' jobs? No. Do we see any benefit from it? People don't starve, but we're a nation with an obesity problem, so how many people starve in America??? Can we turn UE extensions into a better program for all? Yes.

1. Every extension of benefits means that the benefit is cut in half. This means for the first 26 weeks, it's normal benefits. A 26 week extension means you get 50% of your initial benefit. Another extension is 50% less than the previous benefit. This way a benefit is still provided, but it is lowered giving an incentive for that individual to make a move. This removes that tough trade off of why take a job and work for $XXX when I can sit home and receive 75% of $XXX? The French system of UE is set up this way. Wow, awesome for France.

2. Every extension of UE means you show up at the UE office and receive your work assignment. Heck, in all the make work projects of FDR's programs, people were paid money and did actual work. They worked on roads, dams, trails, clean up, etc. If people collect UE, can't we get them to do something around the country? Each county/city would have a pool of workers. I have a strong feeling we'd see people drop off UE if they had to work for UE. For project number 1, I'd send all people on UE extension benefits in the Southeastern Michigan area to Detroit to help raze and clean up condemned buildings and areas marked for destruction. Some of those Southeastern Michigan UE recipients could also be security on school campuses, playgrounds and rough neighborhoods. Here's your yellow vest and a walkie talkie to call in police/fire.

There has to be a better way, as all the government is doing now is creating another entitlement votign bloc. The pain is here and the longer we avoid dealing with it, the worse it will feel. We're in for a ton of pain as the banks start to clear out squatting households and UE gets cut. Lots of money will be pulled out of the consumer discretionary realm. God forbid anyone face any 'pain', please let them squat in their homes forever and keep those UE checks coming. While I am against illegal immigration, I salute the hard work of many immigrants looking for a better life in America. These people do back breaking, dirty jobs that a lot of Americans will not, and except for the illegal part, have much in common with my immigrant ancestors. I never thought in a world of 10% UE (higher if you don't people govt make believe stats), people would avoid work, but I was wrong.

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