Fixing the Unemployment System

Experts have documented the way that employers have shifted the risk of health care and pensions onto the backs of American workers. But few of them have noticed the way that the current recession has shifted even more of the risk to workers and their families, in the form of an inadequate unemployment system. The result has been destabilized families and a destabilized U.S. economy.

President Obama has certainly improved things for jobless workers. In the recent American Recovery and Reinvestment Act, the amount and number of weeks of unemployment benefits was increased. Workers who get health care from their employers now receive an 80 percent subsidy for the cost of the Cobra health care plan that they must be offered when they lose their jobs. The Act also gives states incentives to extend benefits to part-time and low-wage workers, and to workers unemployed because of domestic violence, and to spouses who have to move because their partners are taking a new job. Yet even with these improvements our unemployment system is still a miserable failure at stabilizing families and supporting the U.S. economy.

Today, while 13.2 million people were unemployed in March, less than half collected unemployment benefits. For those workers receiving benefits, the amount failed to support a family. Our system pays far less to replace lost earnings than Canada and six European countries with comparable economies, according to a recent German government study. In the United States, the average unemployment payment is only $292 per week. Only the United Kingdom pays less.

The result of this stingy system is that workers who have lost their jobs often cannot pay their mortgages, provide food, health care and clothing for their families or otherwise sustain their standard of living until they can find a new job. And that means they can't help generate the demand for consumer goods that will be essential in restarting the engine of economic comeback.

It is not surprising that European countries have not supported the U.S. approach of pumping billions of dollars into a new economic stimulus. They have a built-in stabilizer in their unemployment systems, which provide jobless workers with enough income to support consumer demand during a downturn. This safety cushion not only helps workers get through a period without a paycheck, it also allows them to take some time to look for the right job. They do not have to accept the first one that comes along. That means they can find work that is a better fit for their skills, which is good for the workers and for the economy.

In the United States, our meager system means we are always playing catch-up. We act as though this recession is the fault of the worker, when in fact we have a crisis which, in the words of Paul Singer of the Manhattan Institute, "was primarily caused by management and individuals throughout the financial system who exercised extremely poor judgment." But it is workers and their families who are paying the price.

If we want to ensure that workers who lose their jobs through no fault of their own don't end up in bankruptcy or homeless, and if we want to create stable consumer demand that will minimize the boom-and-bust economic cycle, we need to improve our unemployment system.

Immediately, states need to reform their systems to cover part-time and low-wage workers and those who lost their job because of domestic violence or through a partner moving to take a job. But we need to do more. We need to increase both benefit levels and the time they are available, and we need to ensure that unemployed workers have health insurance and the training they need to move to another job. Improving the unemployment system would be a win-win- stabilizing families and our economy.

Comments

[Imee Malabonga]

I agree with you that there's certain stuff that's improved for the recently unemployed. There's additional benefits, or extension of programs, etc etc, and even some workshops for those who want training and job hunts.

IMEE
http://www.cashgrants.org/grant-articles/biden-social-security-payments-to-begin-in-may/

[Flavor]

Thank you Beth, for the article. I do believe the system need some changes, but I think your right for as time allowed getting unemployment. Most americans are going to have to change their field of work and this means some will have to go back to school and if they decide to go back to school or trade school I am for extending their benefits. We are a country known for lending a helping hand how about doing that for the good working people of america. Not one unemployed person is looking for someone to take care of him or her, they just need a hand up, and rightfully so, I don't see anything wrong with extensions on the unemployment checks. I hope that one's who assume that most americans just want to lay on their butts and collect a check consider this, the most givers are working people. Charities, pantries, goodwills, foodbanks ect... were given to by a lot of the unemployed, now they need us.

[Isabel Azevedo]

Society has had two big problems that could be solved in tandem: most of those who work, work too much, while most of the unemployed would like to work.
Benefits from a significant decrease in working hours for those who have a job: more time to take care of one' health, to raise children, to accompany one's elders, to solve house and other practical issues, and, not less, to learn, to think, to create.
Benefits from full employment: more equality, more justice, more quality free time for all, better health, better conditions for children, better future for all.
It seems so obvious and so simple: let's organize a better work distribution. Call in the community organizers!

[andyboy]

You shouldn't make it more attractive to sit on your rear end at home "on the dole".

[sammcity]

I would be careful to say that being on unemployement is "sitting on your rear end". I do not know one person who was laid off who is just sitting around. They are retraining, hitting the streets pretty hard networking, going online to apply, etc.

One only hopes that you yourself will never find the need to file for unemployment. Someone may refer to you as sitting on your rear end...

[andyboy]

sammcity,

You may wel know these people. There are also many who just collect the dough and pretend their looking for a job. They have a spouse or boyfriend or mother maybe who is the main breadwinner.

You sound very naive as do most of the bloggers who fall all over themselves to agree with everything they read here on HuffPo.

I like to think for myself. Thanks.

[andyboy]

In a free society you can never ensure no one goes bankrupt or ends up homeless. A certain percentage will. No matter what you do. Would you argue with this Beth?

[traveller77]

andyboy: I would argue with your statement to Beth that a "free society" can't ensure that no one winds up bankrupt or homeless.

Northern Europe has a lower unemployment rate than we do, a higher standard of living than we do, and everybody is as politically free today as we are. It infuriates me, that people who hold your opinions have kept the rest of us from even trying to improve things for so long. I guess we aren't as "free" as you would like to claim.

It is foolish to argue that we shouldn't try to minimize a problem, just because you think it is impossible to eliminate it entirely. We can still make improvements.

The unemployment compensation system is not "free" money for doing nothing. The system is set up to compensate a worker from losing their job. Even if it were "free" money, I would still be for it because it is very good for the Private Sector. People who have money, even unemployment checks, pay their bills to large Corporations more responsibly than people who have no money at all. When people pay their bills, companies make money. This is the object of being in business in the first place. You can learn more about this by cracking open any good Economics textbook tonight.

tt77

[andyboy]

I see you managed to twist my meaning there. I simply made a point about Beth's post. She wants to "ensure" noone goes bankrupt or ends up homeless.

What about the irresponsible and the criminal? Those who simply make bad decisions on a consistent basis? I don't want to be responsible for a confederacy of dunces my friend.

By the way your condecension is really unattractive. I have a masters in economics. Sorry.

I've "cracked" hundreds of books on the subject.

I also know personally peiople who have sat on their rear ends collecting the dole not even looking for a job simply because it was "free". It's called human nature my friend. These people could not pay their bills but even though they knew it they couldn't stop themselves from getting that unemployment money.

[traveller77]

I've heard that the Unemployment Compensation system was originally set up to protect employers from employee lawsuits, not to help unemployed workers survive unemployment.

90 years ago, large Corporations in New York State began to lose lawsuits filed by former employees who they had laid off. Corporations lobbied Albany to set up a compensation system where workers would waive their right to sue former employers in exchange for a small benefit they called "unemployment compensati­on." It was never called "insurance" back then. Other States copied this original system until it became an accidental National Standard.

This approach is backwards from what a sensible compensation system should be.

We should dismantle this current system and establish a reasonable insurance plan that benefits employees, not employers, and does not remove the right to sue employers that employees used to have. A new system would compensate unemployed workers, offer retraining to every worker, and offer a new job to every worker after some reasonable period of time -- in order to guarantee that all workers would eventually find new jobs.

This sounds radical, but it is practical and it is what our economy needs today. Workers are also consumers, and in a consumer-driven economy like ours, our employers can't afford a high unemployment rate because it also decreases the market for their goods and services. Companies need laid off workers to return to work even if it requires retraining and re-employment on a useful, practical Government Contract.

tt77