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
…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.
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.
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?
…we cannot consider this bill in a vacuum. Industry today is facing a number of bills here on the Hill, all of which are of the same sort, and we have a right to look at them as a whole; because none of them is going to be destructive of industry in itself, but, taken as a whole, they are going to impose a very serious burden on the industries of the United States, which are now trying to come out of the depression.
Related Laws and Rules
Evidence
-
San Francisco Fed Finds Unemployment Insurance Doesn't Significantly Contribute to Unemployment Levels
Unemployment insurance doesn't encourage people to stay jobless.
-
Moody’s Analytics Advocates Unemployment Insurance as Stimulus
For every $1 spent on unemployment benefits, GDP increases by $1.61.
-
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.
