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
In all probability, however, compulsory unemployment insurance cannot be had without an amendment to the Constitution, probably both state and federal, as such a measure might be attacked on the grounds that it is confiscation of property without due process of law.
The fact is that one of the reasons why our business leaders, large and small and in almost every kind of business, are fearful of the future is because of the well-defined campaign of a very few people to foist upon this country a complete scheme of compulsory social insurance. The little group—and it is astonishingly small in numbers, though tremendously vocal—is largely of foreign origin, a substantial part of the advocates of this system coming from Germany and from countries lying further east.
…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.
The imposition on industry at this time of the tax burden contemplated by this measure would render business recovery absolutely hopeless. Manufacturing industry is now engaged in a desperate struggle in an effort to continue operations and provide jobs. Most industries have been operating at a loss for several years. Industry is not prepared at this time to accept the added burden as contemplated by this bill.
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.
