Unemployment Insurance
Unemployment insurance (UI) is an essential part of the American social safety net. UI gives laid-off workers time to find or retrain for a new job while ensuring their purchasing power (this is especially important during economic downturns). The federal government first established nation wide coverage with the Social Security Act of 1935. Under this system states play a crucial role, jointly financing and administering the program with the federal government. Generally, benefits last a total of 26 weeks. During recessions extensions are typically issued, although conservatives often attempt to block the legislation.
Commentary
Cry Wolf Quotes
This bill will cause further migration from the farm areas to the industrial areas and will invite the transfer of workers from the class of those not gainfully employed in order to share in the unemployment benefits…Unemployment insurance, which in many instances places a premium on indolence, would unquestionably defeat this proposed plan of the administration to place workers in the areas of lower living costs and keep them gainfully employed.
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. 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.
Employers pay men, not machines. Can there be any question but that this and similar legislation will drive industry faster and faster toward mechanization? Can there be any question but that its normal tendency will be to depress wages, since the higher the total pay roll, the greater the taxes? Can there be any question but that it will retard reemployment of men and intensify the development of machinery and its substitution for men?
Related Laws and Rules
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.
Resources
Center for Economic and Policy Research (CEPR) is a progressive think tank that concentrates on social and economic policy, both domestic and international.
The National Employment Law Project is an organization that promotes economically just public policy in the face of the prevailing trends of the law several decades.
