Unemployment Insurance

Unemployment Insurance

Unemployment insurance was a critical part of President Franklin Delano Roosevelt’s New Deal, a lifesaver during a period defined by economic volatility, depressed wages, and record unemployment.  Beginning in 1935 with the Social Security Act, short-term relief was provided for the unemployed to provide for their basic subsistence and maintain their purchasing power. Unemployment insurance generally lasts up to 26 weeks, although in the wake of the Great Recession the Obama Administation extended benefits to 99 weeks.

Cry Wolf Quotes

We have just come from another hearing, of the Wagner Labor Board. Now, if you keep piling these things upon industry, where are the reserves going to come from to protect these things? You are going to stop the very recovery necessary to produce this reserve.

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P. H. Gadsden, President Chamber of Commerce, Philadelphia, Hearings Testimony, House Committee on Ways and Means.
03/21/1934 | Full Details | Law(s): Unemployment Insurance

The fundamental objection to the whole plan is that it is based on the false assumption, not merely that the world owes every man a living, but that employees in industry owe a living to every person who chances to be employed in that or any other industry.

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Editorial, Los Angeles Times.
04/03/1934 | Full Details | Law(s): Unemployment Insurance

…in regard to the ultimate consequence of this legislation, that is leaving aside the effect that might be produced this year or next year, on pay rolls, we wish to point out the added incentive it creates for the more rapid introduction of labor-saving machinery for the definite purpose of reducing the total taxable pay roll and thus add to the unemployment....Further there is always a maximum labor cost that any industry can meet and there will be a definite increased tendency for employers to consider this tax as a part of the wages of their employees and keep the direct wage paid as low as possible to reduce such wage by the size of the tax itself; I am indicating that only as a natural business tendency.

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George C. Lucas, Executive Secretary, National Publishers Association, Testimony, House Committee on Ways and Means.
03/21/1934 | Full Details | Law(s): Unemployment Insurance

[The bill] tends to retard the increase of pay rolls, because of the absorption of this amount of money for taxation purposes; it retards the increase of employment also. It is a permanent tax, with no limit, regardless of economic conditions in general or of the individual company. In other words, it may be the last straw, as I said before, that puts this company over the line into bankruptcy.

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Frank H. Willard, Worcester, MA, President, Graton & Knight Manufacturing Co., Testimony, House Committee on Ways and Means.
03/21/1934 | Full Details | Law(s): Unemployment Insurance

Evidence

Backgrounders & Briefs

Unemployment Policy Brief: Shermer

By Elizabeth Tandy Shermer, PhD, February 2010

Unemployment insurance benefits – including  their length, eligibility, and expense – are again in the spotlight.  The arguments are hardly new.