What If Unemployment Benefits Were Structured as a Loan Instead of a Freebie?

There are a lot of strong emotions on either side of the Unemployment Benefits discussion.  On one hand, there are the current unemployed who are pretty miserable right now.  Many can’t find a job commensurate with their skill set and prior pay rate and they’re burning through their savings.  They’re sick of hearing politicians, the media and bloggers bashing them for being on the public teet after losing a job by no fault of their own.  And the checks they’re receiving don’t nearly cover their actual expenses.  On the other hand, we all know people who are totally scamming the system.  I know a few personally.  By pushing the collection period from a reasonable 26 weeks to an absurdly long 99 weeks, many Americans are questioning where it ends.  If 99 weeks isn’t sufficient, why stop there?  I mean, at some point, it becomes evident that the job market has shifted, skills are no longer in demand or the jobs the applicants are seeking no longer exist.  So, how do you assuage both camps and introduce some semblance of “fairness” into the equation?

I can see both sides to some degree but it’s evident our current system isn’t working.  To date, the only solution has been to keep extending benefits over and over but not to address the underlying issue.  Because there is economic evidence that extended unemployment insurance artificially increases the unemployment rate by deterring some from taking jobs (latest study), I was thinking about a middle-ground that might satisfy all parties involved…

Continue Reading What if unemployment benefits were treated like a loan

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scott
scott

I’ve thought about this dilemma too and recognizing that there are many variations in ‘unemployment’ from the wife of a doctor losing her job to the single mother losing her $10/hour Walmart gig in a rural area so, rather than trying to design a ‘program’ to cover all, I thought this might work and be, more or less, budget neutral.

Everyone is covered for 26 weeks under the existing program. After that a person could choose to ‘borrow’ against their expected social security benefits at age 65/66 for another 24 months. They could either pay the money back, dollar for dollar plus interest at the 10 year US bond rate or be ineligible for social security for the time they ‘borrowed’ benefits on a month for month basis. It would be up to each unemployed person to decide if and how much to ‘borrow’ on their social security account.

While it would cost social security more during periods of high unemployment, it would be budget neutral or perhaps slightly positive over the longer term, as we might expect those most in need of tapping their accounts today to either earn more later or, perhaps as likely, be subject to a higher payroll tax in future years. It would also deter those who have other resources be they private wealth, a working spouse or other family support from taking government funds beyond the 26 weeks everyone is entitled to as they would have to give it social security benefits on the back end.

TeresaE
TeresaE

Unemployment benefits ARE a loan.

But it is borrowed against future employment for everyone else.

Michigan businesses are currently paying TRIPLE the federal unemployment that we used to pay. We are being penalized because Michigan has been unable to pay back the federal “loan” for the first round of Michigan extended benefits (going back to ’04? ’05?)

AND, our unemployment rate went from 2.5% of the first $9k in wages per employee, plus federal rate of 0.8% to currently paying 11.75% plus 2.4% federal. I could hire another part time employee – that we could use – if not for paying unemployment on our current ones.

While I’m bitching, I’ll also add, paying those unemployment taxes on my own salary knowing full well I can NEVER claim a dime of them in personal benefits. Owners & family are not allowed to draw the benefits, but get to pay the tax, kinda like the fact that subchapter S corporations are taxed on health insurance for the boss. No other person/business in America has to pay taxes on their health insurance, just us lucky ones – which has got to be a HUGE reason so many small businesses are canceling their employee policies as the costs to provide the benefit far outweigh the good will generated on the floor.

This is what the politicians miss. In Michigan the maximum payout is $375ish a week, pre-tax. In order to “meet” that bare minimum survival payroll, would require you to find a $10 an hour job for at least 40 hours a week (more actually, thank to unemployment being exempt from social security). There are few jobs paying $10 an hour in Michigan.

NO ONE would trade zero effort and $10 an hour, for maximum effort and expense for $7.25 at Walmart.

Extending unemployment only allows people to pretend that they can wait out the “downturn.” So millions of our citizens are doing nothing productive while “waiting.” They will NOT change their lifestyles, nor their efforts, until the day they have to.

Continue to allowing people to do nothing while waiting for results to change for TWO YEARS is insanity at its finest.

As to the loan issue, my first wish would be to stop the insanity no later than a year. If you are out of work a year chances are real good you won’t be returning making the same as you used to. Let reality set in, then let people take care of their own problems. I could see the loan thing working IF people realized that their old pay isn’t coming back and the risk isn’t worth the reward. We all know what would really happen though:

Loans would be issued, millions would sign up, it would look good on paper and then in five years someone would be demanding that the loans be forgiven because they are broke and there isn’t enough money left to pay back loans, the banks, the insurers, the docs, Walgreens and the government.

The program was meant to be a stopgap, just like social security. Instead it is now a right, a freebie and unsustainable.

Somehow original intent means nothing in the Beltway.

Hope
Hope

Treated as a loan, are you nuts? Againt the proposed SS payout? SS being, as you know, completely insolvent right now?

Let me know if I understand this proposal correctly: We are going to allow people to borrow money NOW against money THAT DOES NOT EXIST to pay back with money people will NEVER be able to make in this crappy economy in their lifetimes.

HUH?

You guys need to Embrace the Doom here: THE US ECONOMY WILL NEVER RECOVER, NEVER. We are headed at top speed for Third World status at best, a complete collapse is more likely.

How we recover with 80% of our manufacturing base in China, strangling regulations, rising commodity/energy costs, a dumbed-down-zombie-entitlement-addicted populace and the asshat clowncar kabuki theatre that passes for a fed.gov is beyond me.

There is NO solution here with the current political/financial structure, none.

ssgconway

When I worked for a state dep’t of labor, I suggested, on more than one occasion, that UI be paid on a sliding scale, with the checks larger earlier on and progressively smaller the longer the claimant remained on the rolls. This would give the unemployed an incentive to seek work quickly, as they’d enjoy a smaller check the longer they remained out of work. I also suggested emulating a program that i understood margaret Thatcher to have proposed in England: Letting the unemployed who want to be self-employed collect their benefits 9or a pro-rated amount, at least) as a lump sum, with the understanding that they’d be eligible for no other assistance of any kind thereafter. This would help capitalize a self-employed tradesman or other micro-entreprenuer and provide them with a cushion while they got established. Being plankton on the food chain, I was unable to reach the ears of policy-makers with either idea. (It’s a legislative matter, anyway, so I probably had the wrong audience to begin with.)
Something needs to be done to fix a system designed for the world of the 1930s, whether it’s the above or something else.

Colma Rising
Colma Rising

Nah, fuck that.

An inherantly sub-prime situation.

Dischargeable debt? If not, then yes, it is a third-world solution. Does anyone think the loans wouldn’t be packaged, bet against and sold?

Its quite simple: No jobs=no real asset growth. Free Traitors=seditious. After all, who believes that a giant jobs program built on borrowed funds, aka WAR isn’t coming down the pike?

Axel
Axel

I just think that there are simply too many people and too few jobs for those people. Period. No solution.

Of course, a big die-off may be in the cards depending on how apoacalyptic you want to get. On this forum, there are quite a few that believe such a die-off is inevitable.

Pirate Jo
Pirate Jo

Unemployment insurance should be purchased by individuals on the private market.

People like me would never buy it because I’m willing to take whatever job and can live on very little. (I am debt-free and have no kids.) For me, it would make more sense to just put the money into a savings account rather than pay premiums.

But people who wanted to take on big mortgages or other debts and/or have kids are putting themselves at grave risk if they lose a job. They could protect themselves by buying the insurance.

More Bullshit
More Bullshit

FREE SHIT ARMY on the march.

Campaign to forgive student loan debt gains momentum online

Front Page News

http://signon.org/sign/want-a-real-economic?source=mo&id=31019-9543047-IY_VKMx

TeresaE
TeresaE

Darwin.

It IS a fucking loan.

Everydime of unemployment received by the employee has to be paid by the employer.

We have an “account” and that must be brought back to fully funded or we pay exhorbitant unemployment rates until it is. They even offer us the chance to just mail them a check to cover the expense of the former employees taking two year vacations with untaxed income paying for their entertainment and fast food budgets.

Unemployment is not like welfare, nor food stamps.

Companies still dumb enough to employ Americans pay for it.

Pirate Jo, that is a FABULOUS idea. Just like disability insurance now. Buy it, or not, at your own risk. Because it puts personal responsibility over government control on business we all know it would never fly in the FSofA.

Pirate Jo
Pirate Jo

TeresaE, the situation as it is leads to all kinds of nitwittery. A few years ago, I was hired by a company to be a business analyst. But the company was extremely premature in thinking it needed that type of resource. They hadn’t even implemented the new system for more than two clients yet, and those clients were experiencing all kinds of software bugs with it. To make a long story short, they had no need of a business analyst at all, wouldn’t need one for at least three more years, and wanted to free my spot up to hire a programmer. But (and this was the part I didn’t understand) they didn’t want to fire me or eliminate my position, because that would mean I could file a claim for unemployment benefits and the company would have to pay higher premiums. So, first they asked me to quit. I said I would, just as soon as I found another job. But the job market had tanked by then, so after two months of diligent job-searching I still hadn’t found anything.

After that, my manager began to make my life a daily living hell, and I was simply bullied until I quit. I would do things differently now, but I had never been in that situation before and didn’t know how it all worked. Now I understand what was going on (in legal-ese it’s called a constructive dismissal), and I’m not saying I would have sued the company or anything, but I wouldn’t have allowed myself to be bullied into quitting. At the time, I just thought everything was my fault and that I had done something wrong. It was one of the worst periods of my life. If I had it to do over, I would simply have told my boss that the bullying wasn’t going to work, and that he could either lay me off, fire me, or put up with me until I found something else. I later learned that I was not the first person he had done this to.

Anyway, the point is that this all seems like an awful bunch of silly rigamarole just for companies to get rid of people they no longer wanted. I can leave any job any time I want. If a company wants to get rid of me, I’d rather they just say so and be done with it.

AWD

Unemployment payments are supposed to be a temporary solution to a temporary problem.

Yet, I know people who get themselves laid off, or refuse to return to work after a lay off because they can continue to get unemployment.

What we are going to get, with the aid of the democrats and our economy, is a permanent new welfare state (unemployment recipients) due to a permanent loss of jobs.

The realist, HZK, is once again correct.

KaD
KaD

“THE US ECONOMY WILL NEVER RECOVER, NEVER. We are headed at top speed for Third World status at best, a complete collapse is more likely.

There is NO solution here with the current political/financial structure, none.”

I believe these statements to be correct. Collapse at this point is a given. You cannot have infinite growth with a finite resource base. HOW this happens is another matter entirely. Growth of any kind is the enemy at this point. Sustainability should be the goal. Permaculture is possible. Life is possible with alot less energy sucking technology than we currently use. There will be a new normal once all the shit is done hitting the fan. It doesn’t have to be a living nightmare.

MuckAbout

It sounds like the ladies are all +1 on this thread! I don’t believe in “unemployment compensation” at all. Why “compensate” someone for being “unemployed”? Why not just eliminate the minimum wage laws, and all the other mandatory BS that keeps very small businesses from hiring the help they need and just go with that.

Then those unemployed may be compensated for working – perhaps at a lower rate than they had before the last job failed but so what? If the obstructions to employment (and business formation) were eliminated, the minimum wage laws eliminated, unemployment would rapidly drop to whatever figure represents those people moving between jobs.

Aery Faery, I know.. Sounds silly to even write it out. Never happen until what’s there now is destroyed and those left come out the other side.

MA

FRED FLINTSTONE
FRED FLINTSTONE

Simple question of moral hazard. If people can be paid to do nothing, some will take that deal. We need to make the unemployed wear pink spandex for 40 hrs a week while they are collecting benefits. Make food stamps a gigantic paper check that everyone can see for miles instead of a stealthy little debit card. People who pay taxes should get to have the unemployed come by and get their coffee in the a.m. and whatnot. I work 90 plus every week and could sure use someone to come by and do some stuff around the crib. Also, they should force people to move to where the jobs are if they want to be on the dole. Unemployment benefits should also be subtracted from Income tax refunds. Some of these breeder types get back way more than they paid because of their childbearing proclivities. I don’t hate the unemployed, I just need them to get jobs. Right away.

SSS

Lots of excellent comments in this thread.

Darwin said, “So, what about a consideration of marital status/joint income and/or wealth?,” after he cited two examples of people who lost their jobs and collected unemployment checks to pay for vacations and new cars when their spouse also worked and made enough money to support the family on one pay check.

+1, Darwin. You want unemployment insurance? Ok, then fill out this paperwork which will detail your marital status, spouse’s weekly or monthly salary (attach copies of his/her last six months pay stubs), all your banking and investment accounts, foreign and domestic (attach copies of last six months statements for all accounts), and ANY/ALL other sources of income, such as rental property, monthly allowance from Mommy and Daddy, child support, and shit like that.

Once you do all that, come back and see us to find out whether you qualify for unemployment benefits, if any. And if you’re single, same thing except forget the spouse’s paycheck stuff. But don’t forget to mention if you’re still living in your parent’s basement and eating Mommy’s home cooked food. There will a benefit adjustment if that’s the case.

Gay couples? See married rules above. Except gay men must sign a statement that unemployment benefits will not be used to purchase any item colored purple, and gay women cannot purchase vibrators.

Colma Rising
Colma Rising

How’s about all the money paid into unemployment so far by my employer and myself get done refunded?

It so happens that I’ve worked a very long time at the same job and I would recieve a handsome sum. The fact is I’ve loaned a lot to the UE system already and the shitbag 99ers will ruin it for me if the future does indeed fuck the fuck off. Great.

There are well-paying jobs people just don’t want to do. Whiney pansy dick-tards…

Muck:

You devil-horned genius… remember how you finished up college? I do…

Sounds better every day.

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There comes a time when you just gotta say “Fuck it.”

Welshman
Welshman

When you live in a complex society, many safety nets are formed. I think 26 weeks is fair, but I see what this 99 week UI has done, it is bullshit to say the least. Maybe one could earn it like sick days, or a fee like disability insurance.

I would like to get the burden off small businesses who create jobs. It is like giving three pints of blood when you hire your first employee.

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