The unemployment system in our country is broken. In the four generations since its inception, the program has become deeply rooted in the American social fabric to the point of near-catastrophe. For those unfamiliar with the ins and outs of this social welfare fixture, here is a brief overview:
The mandatory funding for this program is borne by employers, not workers. The annual federal and quarterly state confiscation of business profits are known as “premiums”. The monies collected by each state are gathered in a general pool, and then paid out to claimants in the form of “benefits”. The monies collected by the federal government, FUTA, are used to administrate the individual state programs, and pay the inflated salaries of thousands of government drones. FUTA also steps up in times of high extended unemployment, and pays up to half of the added costs. States may also borrow funds from FUTA if their unemployment accounts dry up.
If a worker loses his/her job, this fund will cough up 36% of their salary for up to six months. It’s designed to keep families from starving or losing their home, and give workers breathing room to find another job. Well, some workers. A few. Not many. Millions of American workers don’t qualify for one reason or another; they’re part-time, seasonal, temporary, self-employed, paid under-the-table, or fired.
Some workers have abused the system for years by working long enough to vest in the system (six quarters here in Arkansas) and then going on the dole for 26 weeks (rinse, repeat). However, the Great Recession has thrown many Americans out of work who have never collected a dole check in their lives, and some of these people seem to be caught like deer in the headlights. More on them in a moment; first let’s discuss the people who are tackling the financial crisis with a uniquely American aplomb.
The millions of folks who don’t qualify for unemployment “benefits”, as well as many who do, have adapted to the changing circumstances by using their brains, creativity, and resilience to direct a different path for their lives. Many have gone back to school to learn new, more marketable (and recession-resistant) skills. Many others have started their own businesses, or work three part-time jobs instead of one full-time job. Families have consolidated households, and cashed out retirement savings to finance new ventures. Millions upon millions are without health care insurance, and as a result are better managing their family’s health. They no longer run their kids to the doctor for every little sniffle, they are saying “no” to unnecessary tests, and they’ve switched to generic drugs or OTC medications. They’ve modified their lifestyles to healthier and safer behaviors. In short, they’ve rolled with the punches.
As previously mentioned, not everyone has successfully managed these rough times. I speak now of the people who are at the end of the unemployment rope (known as the “99ers”, because they have exhausted all UE extensions for the best part of two years), and the people who have dropped out of the job market completely to subsist on welfare and food stamps. Here, the unemployment system has failed. Instead of serving as a “safety net”, it has stripped away self-determination and resolve, and left in its wake an entire sub-group of people snared in paralysis and fear.
Those who have resigned themselves to a life on the dole are probably doomed to the pit generational welfare, but what about the 99ers? The well has run dry. I doubt if Congress will pass yet another extension, nor should they. Two years is enough of a “safety net”, and more than enough time to figure out an alternate direction. The 99ers will now be staring at the hard choices millions of their counterparts have already faced. They must find or create a job that pays at least as much as their UE, or cut expenses and take whatever job is available. Start over. Rent a house, drive an old car, shop at Walmart. Rebuild, brick by brick. It’s the American way, and we’re damn good at it.
Or, as they stand at this crossroads, they can choose the path of submission, and climb into the wagon with the other freeloaders.
Those pulling the wagon are watching with hard, expectant eyes.
We have yet to even see the beginning of the end of our present troubles. The bottom is still a long way down, I fear. I hope I'm wrong of course.
ReplyDeleteBut I'm coming to the conclusion that we shouldn't blame, nor denigrate, those who have been caught up in this latest political battle. Yes, political.
Market forces, including unemployment wages, depend greatly, too greatly, on our central government. Washington needs less money to spend, whether from taxes or the printing press.
lady red, nice post.
ReplyDeleteTwo things:
1) I fear that some substantial part of the unemployment is structural - meaning that those jobs (absent a major new "bubble") are never coming back. The modern economy simply has no place for many people - more and more is being done with less and less. Manufacturing _does_ happen in this country; it's just that it employs fewer and fewer people.
(See, e.g., First Solar thin film panels - very automated process - vs Chinese solar panel manufacturers who string together polysilicon cells in hand assembled panels).
Entrepreneurial spirit will keep some people above water, but it will be a subsistence gig for many.
I appreciate your paean to old fashioned virtue, and institutionalized entitlement has been a great corrosive force. But I'd caution that this is not our grandfather's depression; the wheels of progress (no scare quotes - I'm an unapologetic dynamist) are turning faster and as a society we need to think through how we want to deal with the consequences of an economy with fewer opportunities for work.
I can see a future where only about half of the traditional "employment pool" will be employable, simply because you'll need to be above-median intelligence to keep up with your job. What then? I find this a frightening prospect, but I'm not prepared to circumscribe the human narrative to avoid it. (Besides, even if we decide to go Luddite, some great country or civilization won't, and then where will we be?)
2) FUTA shares a property with the Moro Islamic Liberation Front (MILF) in that both are Charter Members in the Society of Infamous Acronyms.
Do not - repeat, do not - google FUTA with "safe search" turned off. By clicking this link, for instance. :D
Learn something new everyday. Thanks, Lewy, I guess. :)
ReplyDeleteLady Red - I looked at my last pay stub, and saw that I do pay an admittedly small amount for unemployment 'insurance' (as it used to be called) each payday.
ReplyDeleteOf course I have no idea (could ask, I suppose) how much more my employer might pay.
While you are certainly correct that there are those out there who abuse the system, I think in this case it is more as Lewy said, there are simply no jobs available, and possibly never will be, for many who are now on unemployment.
As I was typing this, it suddenly occurred to me that you & I had had this discussion earlier, but were arguing the opposite sides of the question.
My post was intentionally harsh, and I was looking inwardly as well as outwardly when I wrote it.
ReplyDeleteNoah and I had a long conversation about this the other morning, and we bounced back and forth between "there aren't any jobs...extend unemployment...no one is talking about cutting welfare for people who have never worked, why cut subsidies for people who have worked all their lives?" to "damn. Two years is enough. The bread-winners of the nation have to get creative and figure out a way, or we're doomed."
I think Matt's words of wisdom in our header says it all: We cannot sacrifice what is right for what is expedient.