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
…no matter who pays the unemployment insurance bill in the first instance, it comes out of money available for wages and so is all paid by the workers in the long run. But like other indirect taxes, those who bear the burden do not realize in under such a scheme as the Wagner-Lewis bill proposes. If they did, they would be careful how it was spent and would raise objections if slackers and chiselers attempted to love off it. If they thought it was being paid by employers and by the State, many would be tempted to join the slacker and chiseler class. Any bill which purports to lay the whole burden on management (although it cannot be done) is doubly vicious in tendency.
…we are going on the theory that it will create jobs. It will not. We shall create jobs only by giving confidence to people who are in a position to hire other people.
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.
The imposition on industry at this time of the tax burden contemplated by this measure would render business recovery absolutely hopeless.
Evidence
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San Francisco Fed Finds Unemployment Insurance Doesn't Significantly Contribute to Unemployment Levels
Unemployment insurance doesn't encourage people to stay jobless.
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Moody’s Analytics Advocates Unemployment Insurance as Stimulus
For every $1 spent on unemployment benefits, GDP increases by $1.61.
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Congressional Budget Office Says Unemployment Benefits Have Strongest Stimulative Effect
Unemployment benefits make macroeconomic sense during a recession.
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.
