Withdrawing Unemployment Insurance Will Not Solve Job Crisis

About Carl E. Van Horn:

Carl Van Horn is professor of public policy and director of the John J. Heldrich Center for Workforce Development at the Bloustein School of Planning and Public Policy at Rutgers University. Van Horn co-directs the Heldrich Center's Work Trends project that surveys American workers about their views of the economy, the workplace, and employment.

1. The Long-Term Unemployed Are in Dire Financial Shape.

Eliminating unemployment insurance will make matters much worse for those who are already experiencing a financial disaster. In 2009, the Heldrich Center conducted a national survey of workers who lost a job during the recession. When we re-contacted them in August 2011, we found that 4 in 10 were still unemployed or working part time and looking for full-time jobs. Among that group, three quarters had been out of work for more than six months. Fully half had been jobless for more than two years. Their financial condition is dire. They have not only reduced spending on things they would like to have, like vacations and clothing, but also on things they need, such as food, transportation, and healthcare. Sixty percent have sold possessions and borrowed money from family or friends.

[Mort Zuckerman: 5 Sure-Fire Ways to Create More Jobs.]

2. UI Benefit Support Makes Re-employment More Likely, Not Less.

Eliminating UI will lead to less job seeking, not more. Our surveys found that--compared to people without UI support--those receiving UI spent more time each week going to job interviews and job fairs, networking with friends and colleagues, and scouring the Internet and newspapers for job openings. Enrollment in UI programs keeps workers in the labor market. They get more advice, encouragement, and training. And, job seekers on UI are required to regularly report to state employment agencies about their job search activities.

3. Cutting UI Benefits will drive up the cost of other government programs.

Without UI payments, more unemployed workers will drop out of the labor market and fall into other government safety-net programs. Seven in 10 of the long-term unemployed workers in our study described their financial condition as flat-out "poor." Yet, the average UI benefit of $1,200 per month--less than the $1,400 average monthly cost of housing in America--is often the vital source of income that enables them to pay their mortgage and feed their family. Withdrawing UI will not solve the job crisis in America, but it will drive up spending in other federal programs, such as food stamps, disability insurance, Social Security, Medicare, and Medicaid. Unemployed workers--who would much rather get a job than get a check from the government--will be driven to these programs as a last resort.

• Unemployment Drops--Does Obama Deserve the Credit?
• Does Extending Jobless Benefits Help the Economy?
• Unemployment Rate Drops to 8.6 Percent.

Tags:

unemployment,

economy,

insurance,

employment

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