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The Budget and the Unemployed

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"When a great many people are unable to find work, unemployment results."
-- Attributed to Calvin Coolidge

The unemployed in many states have been given what they, at least, hope is a once in a lifetime opportunity to help the states and federal government solve their budgetary problems, an opportunity that hunger and homelessness may keep them from fully appreciating.

Michigan
led the way when on March 29th Governor Rick Snyder signed a bill that says beginning January 2012 the number of weeks the unemployed will receive benefits will drop from 26 weeks to 20 weeks. It is estimated this will save the state $300 million each year. Since Michigan has one of the highest unemployment rates in the country at more than 10%, a significant number of its citizens will be given the opportunity beginning next year to participate in bringing government spending under control. They will also be benefitting those who might employ them, according to supporters of the legislation, since reducing the unemployment benefits will reduce the unemployment taxes paid by employers. It is a win-win situation although the employers will appreciate it somewhat more than the unemployed. Michigan is not the only state addressing the issue.

Florida boasts an unemployment rate of 11.5% and its House of Representative proposes to not only reduce the number of weeks for which unemployment benefits will be paid from 26 to 20 weeks but to provide that if the unemployment rate falls the number of weeks that benefits are paid also falls. If the rate drops to below 5% members of the below 5% group will only be able to collect unemployment benefits for 12 weeks. It is not clear why those who remain unemployed when the rate drops should pay a price for the good fortune of the 6.5% who are no longer a member of their club. Supporters of the House version say by reducing the number of people receiving unemployment benefits, businesses will do more hiring. The unemployed will eagerly await that outcome. (This proposal is not yet law. The Florida Senate has passed a less restrictive version of reform that neither shortens the number of weeks of payments nor penalizes recipients of unemployment as the rate of unemployment falls. Negotiations between the two chambers will determine how it will end up.) Meanwhile in the mid-West there's the "Show Me" state-Missouri.

Missouri is a conscience driven state. Missouri has an unemployment rate of more than 9 percent. Legislators in that state are more concerned about the national debt than about their unemployed. Missouri legislators have blocked a vote that would have permitted the state to accept federal funds to extend unemployment benefits from 79 weeks to 99 weeks. Jim Lembke is one of the state senators filibustering the legislation. Speaking on behalf of the opponents of taking the money as well as the unemployed who are in the district he represents he said: "This is about sending a message to the federal government from the state of Missouri that enough is enough. The federal government is sending us money they don't have." If it is money the federal government does not have then presumably it is money the unemployed could not have used anyway. (Mr. Lembke also plans to take steps to try to keep the state from accepting $190 million in federal education money, efforts that will earn him the thanks of school children throughout Missouri.) If Mr. Lembke is successful, 10,202 people will immediately lose their benefits and, by the end of this year, another 24,000 people will have lost their benefits. Mr. Lembke, on the other hand, will have helped the federal government save $105 million for which it, if not his unemployed constituents, will be grateful.

Wisconsin has not reduced benefits but has taken steps to reign in costs. The Wisconsin Legislative Audit Bureau discovered that in the 2009 fiscal year there were more than $9 million in overpayments of unemployment benefit payments of which $222,000 went to 37 prison inmates who though unemployed, are not the sort of unemployed that unemployment payments are designed to help. (The same study showed that there were 33 inmates who received food stamp benefits, a surprising result since one of the benefits of being in prison is that room and board are furnished by the state and food stamps would seem to be unnecessary.) The state agencies that are responsible for having made the payments say that they are taking steps to recover the money and may even pursue criminal charges. One can only wish them success in their efforts. Helping the unemployment fund stay solvent by recovering money from those who collected it fraudulently is far preferable to keeping it solvent by reducing benefits. Just ask the unemployed in Florida, Michigan and Missouri.

Christopher Brauchli can be emailed at brauchli.56@post.harvard.edu. For political commentary see his web page at http://humanraceandothersports.com